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MPs out of touch, or on the money?

MPs have attempted to stop lawyers offering free iPads and shopping vouchers to encourage compensation claims from accident victims. PremExtra reviews how the media reported the Transport Select Committee's latest recommendations… 

The Daily Mail carried out a full-frontal attack supported by ammunition duly supplied by the Commons Transport Select Committee (CTSC) on law firms that it said 'induce frivolous whiplash claims that drive up insurance premiums across the industry'.

The paper said research 'going back to 2012' reveals how some law firms have been offering road accident victims 'free iPads', 'hundreds of pounds in cash', or shopping vouchers to encourage them to make personal injury claims.

In slightly more sober tone, the CTSC report said: "Inducements to claim are likely to have encouraged fraudulent claims so we support the government's intention to ban them."

The CTSC has itself come under fire from insurance industry insiders which rejects the committee's proposal to prevent insurers settling whiplash claims before obtaining a medical report.

The select committee insisted money saved from reducing fraudulent and exaggerated claims would "more than compensate for any extra costs resulting from more stringent requirements for dealing with whiplash claims".

However, coverage in Post Magazine reveals that many industry representatives have reacted angrily to the CTSC proposals. Among them is Martin Milliner, LV's Claims Director, who has called the proposal "out of touch", adding: "The principle of stopping the practice of insurers settling personal injury claims before the claimant has undergone medical evaluation is admirable but it is completely out of touch with what behaviours are operating in the personal injury market place today."

He continued: "Such a suggestion would in fact drive up costs and therefore premiums and give even more power to claimant lawyers in what is an already imbalanced process. On this point, the CTSC has failed to understand why insurers are compelled to in some cases settle on a pre-med basis in order to keep the overall cost of insurance down."

However, not everyone in the industry has gone against the select committee. Post Magazine also carried comments from MASS chairman Craig Budwsorth, who claimed 'pre‑med offers' create openings for questionable practices.

MASS calls for an end to cycle of poor practice

"Sometimes solicitors ask for pre‑med offers because historically they have been offered," said Craig Budwsorth, adding that for some insurers this was common before calling for an end to "a cycle of poor claims practices."

The CTSC is additionally urging the government to press the Solicitors Regulation Authority to prevent personal injury lawyers from commissioning unnecessary medical reports on psychological injuries.

Legal Futures quotes transport committee chair Louise Ellman MP, who said: "While premiums are now falling, aspects of the market remain dysfunctional and have encouraged criminality to take root."

The committee's latest inquiry into whiplash reform was launched in November, after an earlier report was widely credited with persuading the government not to raise the small claims limit.