Donna Scully, the former chair of the Motor Accident Solicitors Society (MASS), has warned the insurance industry that it may face a major public backlash when people discover that they cannot claim compensation for minor soft tissue injuries if the Government’s proposed reforms in the area are pushed through.
Speaking at the Motor Insurance World Conference in Milton Keynes, the partner at law firm Carpenters said that a consultation on the scrapping of general damages for low value injury claims was likely to contain proposals that were not an ethical or responsible way to treat vehicle insurance customers.
“How will many long-standing and loyal policyholders feel when only after they pay their insurance premium, they find themselves needing to make a genuine claim for an injury or financial loss, but will be unable to do so?” said Scully.
“Think of the outcry when the public realises what is being proposed and starts to experience the rejection of legitimate claims. The ensuing customer complaints. The complaints to regulators and politicians. The potential involvement of the CMA.
“I do not believe that I am alone in finding Lord Faulks’ recent reference to claims – even genuine ones – as “unnecessary” deeply disturbing. Let me say it another way. We are proposing that we take premiums from customers, but then will not pay out when they have a genuine claim.
“That does not sound like an ethical and responsible way of treating policy customers.”
Scully also warned delegates that the claims management market was gearing up to fill the void that would be created by raising the small claims limit, another policy that the Government is expected to consult on following the EU referendum this June.
She said that the Government and insurers should be concerned that claims management companies would recalibrate their business models to match any changes to the low value claims market.
“We can be quite sure that they are already thinking about how they might exploit the system being proposed,” said Scully. “They will direct clients to use the Portal or use it as them on their behalf.”
“They are already preparing for a rise in the small claims limit by employing, or even worse having self-employed, McKenzie friends to look after and represent accident victims following accidents, taking a huge cut of their damages for the privilege.
“There is nothing particularly friendly about people with no experience, no professional indemnity insurance and, perhaps in some cases, few morals, representing you after an accident.”
She added that claims could actually increase as a result of a rise in the small claims limit, creating an environment where there was more cold calling and dubious marketing practices.
“Surely that is the last thing intended by the Ministry of Justice, but that is probably going to be the result,” said Scully.