Insurers 'put pressure on claimants to settle for less'

Graham Goddard, Unite's deputy general secretary, says: 'We have given the FSA compelling evidence. There is a clear case for action to bridge a gap in the regulatory regime. Accident victims lose out because if they aren't receiving truly independent advice, they don't know the true value of the claims. Our evidence is that sometimes they are being told they don't have a good case when they do.'

The insurance industry acknowledges that 'third-party capture' is increasingly part of its business model as, insurers argue, a direct response to the increasing cost of processing claims. They argue that going directly to accident victims is a way of simply cutting out an expensive middle-man - the lawyer.

'No insurer wants to be accused of pressurising claimants into accepting compensation payments,' says Malcolm Tarling, a spokesman for the Association of British Insurers. 'Insurers want to identify those claims they believe are straightforward, where liability may not be in dispute and injuries are relatively minor. They want to settle these cases as quickly as possible.'

He claims that 'for every £1 paid in compensation, around 40p is paid in legal fees', a figure that can be as much as 70p in lower-value, more routine personal injury claims.

Royal & Sun Alliance is rebranding its claims handling RSA Care, with a view to increasing third-party capture. David Frost, its technical manager for motor claims, describes the legal process as 'horrendously elongated and massively costly'. He says: 'We were struggling to find the added value lawyers were bringing to typical low-value injuries,' and added that 'up to half' of third-party claimants are happy to resolve claims directly.

Norwich Union reckons that as many as 70 per cent of injury claims are straightforward enough not to need independent advice. A spokesman says claimants 'are always made aware that they are entitled to seek independent legal advice at any stage'.

Martin Bare, the president of Apil, argues that insurers are shirking their responsibilities. 'It is the job of insurers to pay compensation to those who are injured. To make sure the playing field is level, it's important that the claimant gets independent advice. That is the cost of the system.'

I felt intimidated

'It's a nightmare. I'm having sleepless nights,' says Nicky Ridha of the back pain she still suffers nearly three years after a car drove into the rear of her Renault Clio. The impact exacerbated an existing condition (scoliosis, or curvature of the spine) which had never seriously bothered her before. 'Now my back hurts when I do the most simple things - trying on clothes, shopping or reversing my car.'

Nicky was surprised to get a call the day after the crash from Elephant (part of the Admiral group), which insured the motorist who drove into her. She was offered £1,000 to settle the claim, but declined. Elephant rang back the next day, offering £1,700. 'I said I was waiting for medical advice, but they sent me the cheque, which I sent back.

'I felt intimidated, but was not prepared to take any offer until I knew what I was facing for my future.' She was referred to a consultant in August 2005 and is still having treatment.

She instructed her own solicitor, and in December 2007 received a cheque for £12,500 from Elephant.

A spokesman for Elephant said: 'All our case handlers are trained to explain every option available, and we ensure that we do not harass any third party as we are simply offering an alternative, not forcing them into anything.

'When we first speak to the third party, we ascertain as much information on the incident and the injury as possible so we are able to make a realistic offer. In Mrs Ridha's case our offers were based on the information we had at the time, which was that it was a whiplash injury, her GP had advised rest and she had not taken time off work.'

What you should do

·If you are injured in an accident, you should take independent legal advice.

·If you are a trade union member - or a family member is - you can receive this free through the union's legal service. If you are not, go to a specialist personal injury law firm. To find one, visit www.lawsociety.co.uk

·Don't trust insurers who knock on your door and want to talk about a claim, or ring or write to you and offer compensation.

·There are time limits (normally three years) for pursuing a personal injury claim, so don't rush into accepting any financial offer.

Source: Thompsons law firm