Ban on Referral Fees

Many people know that come April 2013 there will be a ban on referral fees.

At the moment there a hundreds of Claims Management Companies (CMC’s). They advertise morning noon and night “Make a claim, make a claim, make a claim !!!” The media hype has increased public awareness of the claims process and created the “compensation culture” we now live in. I believe it was David Cameron – our own Prime Minister who called the UK “the whiplash centre of Europe”.

With the increase in claims, insurance premiums have risen and risen. Each year the number of claims being made for personal injury and other losses are on an upward spiral.

In response the Government has stepped in and will now as of April 2013 ban referral fees. This means that CMC’s can take on through the media as many claims as they like – they can advertise and flog the claims process to their heart’s content – but they can not sell the claims. At the moment, all the claims they “capture” are sold to firms of Solicitors. If you, as a Solicitor want to cash in on the work – you have to be the highest bidder !

It doesn’t stop there. Once the Solicitor gets the claim there are other “spin-offs”. A legal expense insurance policy has to be taken out to protect the Claimant from any adverse costs order. Guess what – legal expense insurance company’s are paying referral fees if you take out one of their policys. A medical report needs to be prepared to base the claim upon. Again, medical agencies employed in this field will pay a referral fee if you refer the claim to them.

The “cost” of bringing a claim therefore goes up and up as the referral fees get bigger and bigger in order to entice the Claimant. The ban on referral fees must therefore be a good thing from this point of view.

But how will this change things for the Claimant ?

More recently CMC’s have been able to set up what is known as an alternate business structure (ABS) with Solicitors. So, instead of “referring” the claims to Solicitors for a fee they have set up in effect their “in house” firm of solicitors and simply share the profits between them.

In April with the complete ban in place there will undoubtedly be more and more of these ABS structures. The worry is that these “structures” are going to be put in place at the last minute. They will be poorly structured, poorly run, and based on a shoe-string budget. The CMC’s are not lawyers. They may be excellent at marketing themselves and bringing the claims in, but are they lawyers ? No. Can they ensure that the people doing the work they capture are properly qualified, experienced and can deliver the same professional service that the successful lawyers who albeit are currently paying “top dollar” for the referral of the business are currently providing ? I doubt it.

I think that on the whole Claimants in the ‘New World’ will receive a less favourable service through a CMC. I think more and more Claimants will revert to their High Street practice and we may well see the end of the CMC.

This page © Copyright 2012, Vashti Norman Solicitor, Mediator and Notary Public.

Low Velocity Collisions

If you have recently been involved in a road traffic accident you may have been told that the other party insurers will not pay out on any personal injury claim you may wish to make because there is little or no damage to the vehicles.

Why ?

Insurers say that the UK is “the whiplash centre of Europe” .  “Crash for Cash !” they say .  Compensation Culture gone wild.  The result is that if there is little or no damage to their insured’s vehicle they immediately question whether the occupant of either vehicles involved could have suffered a whiplash injury.  They will immediately inspect your vehicle and if the cost of repairs to either your vehicle and/ or their vehicle is under £500 they will refuse to pay out the claim.

To suffer a whiplash injury in a car accident your head would have to be flung forward and back.  It is this movement that gives the injury it’s name: “whiplash”.  The symptoms that follow on from this type of injury are usually neck pain and stiffness, headaches and sometimes symptoms radiating into the shoulder and upper back.

Where vehicles are travelling very slowly  (such as in stop start traffic) whilst you have been hit in the rear by the car behind you are unlikely to suffer a whiplash.  This is usually because the speed on impact is insufficient to move you sharply forward and back in this manner.  This speed is often referred to by motor engineers as the Delta V –  If one vehicle is moving at speed and strikes another vehicle the energy is transferred from the first vehicle to the second vehicle.  It is that energy that will cause the occupant to be flung forwards in the vehicle.  The vehicle has to be travelling at more than 5mph in order to transfer sufficient energy in order to move the victim.

In short therefore insurers say that where the vehicle was travelling at less than 5mph it is impossible to suffer a whiplash injury, as you simply could not have been moved in that manner.

There is understandably always a dispute as to the speed of the vehicles.  If you have ever had a vehicle drive into the rear of your car you will know what I mean when I say it always sounds worse than it is.  The noise is loud !  Most victims therefore always say “Oh he must have been going faster than 5mph – there was a really big bang”.

If there is a dispute as to the speed of the vehicles the insurers then look at the damage to the vehicles.  Again, where a vehicle is travelling at less than 5mph it is unlikely to do a great deal of damage to the other vehicle.  The “magic” figure is £500.  Generally where the damage is less than £500 the insurers will not pay out on a whiplash claim as they say it is indicative of a low velocity collision.

So if you are involved in an accident and there is less than £500 worth of damage to your vehicle the other party insurers are unlikely to pay out on your whiplash claim.

This page © Copyright 2012, Vashti Norman Solicitor, Mediator and Notary Public.

Accident at Work Claims

The Enterprise and Regulatory Reform Bill is about to bring huge changes to claims involving accidents at work. 

The Health and Safety at Work Act 1974 has a number of regulations that have to be followed by employers in relation to providing a safe place of work, safe equipment and safety clothing where necessary in respect of their employees.

When an accident happens at work the employee can bring a claim for compensation for any injuries they have suffered as a result of the employer having breached the regulations.

The regulations impose strict liability on the part of the employer. In most cases the employer has been negligent in some way.  However if the employer has not been negligent if the regulations have been breached he is till liable to his employee.

Take the following example:  An employee is at work using a spanner. The spanner is in some way defective and as the employee has used the spanner is snaps, causing him to fracture his finger.  The employer is not negligent.  The employer had no reason to know that the spanner was defective and to have replaced it.  The employer is still liable however.  The Health and Safety at Work Act requires the employer to provide his employee with safe tools.  The spanner is not safe – it is defective and the employer is therefore liable – irrespective of the fact that he is not negligent.

The Bill however seeks to “do away” with the regulations.  The Government is looking to instead have criminal regulations in place.  Whilst employers can therefore be prosecuted by the HSE (Health and Safety Executive) for breaching the regulations, the employee will not be able to bring a civil claim against the employer for any breaches and injuries that result from that breach.  If the employee wants to bring a claim against his employer he must show negligence.

It follows that if the above case were to occur following the implementation of the bill the employee will have no claim for compensation whatsoever.  Whilst the HSE can investigate and take whatever action they see necessary, the employee will be excluded from any compensation claim for his broken finger unless he can establish some degree of negligence on the part of his employer !

This page © Copyright 2012, Vashti Norman Solicitor, Mediator and Notary Public.