The Association of British Insurers (ABI) expressed serious concerns about solicitors being involved in false whiplash claims during the annual Motor Accident Solicitors Society (MAAS) conference. James Dalton, the ABI’s assistant director for motor and liability, pointed out that some solicitors may be either supporting or initiating fake whiplash claims. This brings up an important question: Are solicitors part of the problem instead of the solution?
Solicitors operate under the oversight of the Solicitors Regulation Authority (SRA), which ensures they maintain a high standard of professionalism. The SRA expects solicitors to be knowledgeable, skilled, and honest when dealing with clients. They can investigate any behavior that appears incompetent, deceptive, or unethical. However, misleading whiplash claims seem to evade the SRA’s attention. Is it because these claims are too minor, or is there no substantial case to investigate?
In 2011, the ABI labeled the UK as the “whiplash capital of Europe”. Research from Baizer Kolar P.C. indicates that roughly 1,200 whiplash claims are made daily in the UK, costing insurers around £2 billion annually. While these figures haven’t been significantly disputed, they don’t clearly reveal the number of false claims due to the lack of a foolproof detection system. So, why did Dalton focus on solicitors during the MAAS conference?
One reason could be the rising insurance premiums often blamed on uninsured drivers, offenders, and whiplash fraudsters. Insurance companies rarely mention their tendency to increase premiums to protect or even grow their profit margins. For example, Admiral reported a pre-tax profit of £160.6 million for the first half of that year while also hinting at a rise in personal injury claims. Given that insurance companies are profit-driven, it’s not surprising that Dalton targeted supposedly fake whiplash claims while insurers continue to make significant profits from their clients.
Interestingly, solicitors have been criticized even though insurance companies often refer whiplash claim cases to law firms and accident management companies. Dalton argued that insurers need to recover some of their costs, but if fraud is so widespread in whiplash claims, why do insurers keep sending business to solicitors? The answer lies in the referral fees, which firms pay insurers for new personal injury claimants.
Insurance companies benefit whether the claims are valid or not because their costs are offset by referral fees and insurance premiums. Moreover, since a few groups own the majority of the UK’s leading insurance companies, costs can be spread across subsidiaries. This discreet system can help companies justify higher premiums, especially when considering the NHS spends only £8 million on treating injuries that cost £2 billion.
From an outsider’s view, it’s difficult to determine whether solicitors are acting honestly.
Getting back to the central issue, it’s essential to differentiate between accident management firms and solicitors. Due to recent legal changes, a victim’s initial contact about their compensation claim is more likely to come from an accident management firm rather than a solicitor. These firms, which are not bound by the same regulations as solicitors, are reported to play a significant role in fraudulent claims. While some solicitors might be involved in fraud, they are not the main culprits.
This content was written by Denver Burke for Ead Merseyside Solicitors. Denver is a dedicated content creator with diverse topics covered on the web, sharing his passion and expertise on various subjects.