In their pocket

Last month saw an extraordinary attack on claimant personal injury lawyers by the insurance industry, the government and opposition MP Jack Straw, culminating in an announcement to ban referral fees and Jack Straw's proposed Motor Insurance Regulation Bill in his ten minute speech to parliament.

In an article on the BBC website on the rising cost of motor insurance premiums Paul Evans, chief executive of AXA UK and Ireland, claimed that for insurers motor insurance has not been profitable for many years due to the cost of personal injury claims. Mr Evans called for a ban on referral fees and criticised the level of costs in low value personal injury claims currently fixed at £1,350. This startling suggestion that UK motor insurers do not make a profit was not borne out by the figures, with AXA UK's profits being announced as being up by 34 per cent overall. In addition Admiral's chief operating officer announced that pre- tax profits for the first six months of the year came in at £160.6m, up 27 per cent on the same period last year. Clearly any suggestion that insurers are not making money from car insurance is all spin and no substance.

Following on with this momentum the Ministry of Justice made an announcement on 9 September 2011 to ban referral fees in a bid to curb the so-called compensation culture, something which Lord Young in his report for the government only last year concluded was a perception and not a reality. The Legal Services Commission had also advised the government not to introduce a ban. It was noted this would apply only to personal injury cases only and not areas such as conveyancing and it was suggested this practice would also be criminalised. This was not simply a principled ban on referral fees but part of a wider plan to demonise and attack claimant personal injury lawyers and their injured clients. The media geared up with the usual talk of ambulance chasing lawyers.

Unjustifiably demonised

Why this work is not considered worthwhile to society but is demonised is testament to the influence on the insurers upon the media and the government.

This announcement also hailed the Jackson proposals - already before parliament - as reducing costs in abolishing success fees against the insurers. Why should a claimant, especially one badly injured through no fault of their own, have to pay a large part of their damages in costs? This is a question which the Spinal Injuries Association appears to feel strongly about given that the charity has already launched a judicial review on the reforms for fear of the effect on badly injured victims.

In his address to parliament on 13 September 2011 Jack Straw said referral fees caused car insurance to sky rocket and claimed that the costs of cases under the new RTA portal were too high. The presumption that the fee is too high does not mention that in the majority of cases it is lower than the previous fixed fees set in 2003 in which such figures were meant to be reviewed and rise each year, which never happened. It seems clear to many claimant lawyers that what is happening at the moment is a concerted attack by insurers and government alike against injured victims and their lawyers for the benefit of the rich and powerful insurers.

As for Jack Straw helping bring down the cost of car insurance premiums it is perhaps a blow to this that Admiral announced candidly that if referral fees were banned then premiums would have to rise given that their profits in this regard would fall.

Two stories alluding to the power of the insurers were published in The Guardian on 16 September 2011. The first alleged that financial firms with insurance interests have given the conservatives £4.9m in donations since 2005. A second story also alleged that Jonathan Djanogly would personally profit from the proposed changes given his personal stake in the insurance industry. The Guardian alleged that in 2009 such profits exceeded his ministerial salary causing the shadow justice minister to comment that 'there are serious questions for the minister to answer. It would be a serious matter if the minister were pursuing legislation from which he might benefit financially.'

For the last decade personal injury lawyers have been the target of the insurance industry. However the simple fact is that in trying to allow justice to an injured claimant whom in many cases have had their lives devastated is a job to be proud of despite the ambulance chaser image. It seems that currently the combined attack of the insurers and the current government is to abolish the personal injury lawyer to the sole benefit of the insurance industry to make more money but at the detriment to the injured victim.

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