Allow pre-medical offers for certain claims, says Lloyd’s Market Association

The Lloyd’s Market Association (LMA) has called on the Government to permit pre-medical offers in certain circumstances as it digests responses to its consultation document on small PI claim reforms.

The LMA has said that it supports the vast majority of proposed reforms included in Reforming the Soft Tissue Injury (Whiplash) Claims Process, but wants to see pre-medical offers permitted in certain circumstances, such as where claims are presented more than six months after the accident. It says that a medico-legal report offers no benefit in such cases and only adds time and cost to the settlement process.

The Ministry of Justice (MoJ) is currently proposing to ban insurers from making settlement offers before a medical examination has been undertaken.

David Powell, LMA Non-Marine Manager, said: “At present it is extremely difficult for insurers to defend against unmeritorious soft-tissue claims. Diagnosis of soft-tissue injuries and any related pain and suffering is self-reported by claimants, often months after the accident. Doctors are incentivised to support the claimant and the resulting legal ‘evidence’ is almost impossible for insurers to challenge or disprove.

“A direct consequence is that costs for insurers have spiralled out of control, with claims now 50% higher than 10 years ago, despite a fall in accident frequency. Premiums will remain unnecessarily high unless we change the compensation system to remove incentives for middlemen and minimise abuses”.

However, the LMA’s thinking on pre-medical offers directly contradicts that of large sections of the claimant community.

In its response to the consultation, TRUE solicitors has said that any increase in the number of injury claims is due to an entirely dysfunctional motor insurance industry, which makes “epidemic numbers” of pre-medical offers to represented and unrepresented claimants.

“The number of injury claims is higher than a decade ago but the increase is a direct consequence of an entirely dysfunctional motor insurance industry,” said the firm.

“It is clear from the consultation paper that the insurance industry has been less than candid about its use of pre-medical offers […] the consultation document […] states ‘anecdotal evidence indicates that around 10% (in excess of 50,000 cases) of all RTA PI claims are currently settled without a medical assessment’.

“This figure is demonstrably wrong and ignores the thousands upon thousands of RTA injury claims that insurance companies capture and settle direct without medical evidence where the claimant is not represented.

TRUE goes on to say in its response that from 15 March to 16 April, its system recorded that it received pre-medical offers from insurance companies on 25.31% of all cases that were settled. It also said that other law firms handling volume RTA claims experience similar numbers of pre-medical offers.

“Although we advise all clients to reject these offers and to obtain proper medical evidence, a small number will accept. However, contrary to what the insurance industry told the Government, we do not request these offers.”

TRUE also argues in its response that insurers make pre-medical offers on 50% of all cases with half being made to unrepresented claimants.

The firm has come to the conclusion by using one of the main assumptions in the MoJ’s Impact Assessment, which says that 80% of pre-medical offers are made to claimants with no legal representation, and applying it to its own settled case statistics, which show that pre-medical offers are made on 25% of all settled cases.

“[This] would suggest that pre-medical offers are made on 63% of all claims with 50% being made to unrepresented claimants.”

The firm admitted that the figures were based on the assumption that other law firms receive similar numbers of pre-medical offers, and that the MoJ was correct in stating that 80% of pre-medical offers go to people with no legal representation.

“Further evidence about the number of pre-medical offers can be found in figures released by the Compensation Recovery Unit (CRU) showing the number of settlements for unrepresented claimants,” said TRUE.

“Insurers who receive a claim for compensation must notify the CRU within 14 days and this includes details of the injured person’s representative. According to the CRU, 24.23% of all motor settlements are where the claimant is not represented, with the figure increasing to almost 26% for soft tissue claims.

“This evidence, together with the data from our case management system, shows insurers make pre-medical offers on 50% of all cases with half being made to unrepresented claimants.

“The enormous volume of pre-medical offers is a huge embarrassment to the insurance industry and the Government should be suspicious that an industry that prides itself of the quality of its data does not record details of pre-medical offers.”

Mark Dugdale