Every day thousands of us will receive a call from a Claims Management Company (CMC) – you know the ones, ‘have you been in a car accident recently?’ Many of us hang up on these annoying nuisance callers, but sometimes they are persuasive enough to encourage the listener to make a claim. They will always make it sound simple and carefree to make a claim, and what’s more it’s allegedly No Win No Fee, but what is the true cost of CMCs?
No genuine injury? No genuine claim.
Firstly, let’s deal with the fraudulent aspect of this. Our purpose as an insurer is that we’re here for our customers and to put things right for third parties if things go wrong, but in a lot of cases that come through CMCs several months or years after the accident we see people who do not have a genuine injury – this is fraud. They may say that there’s ‘money waiting’ for them and that they can handle the entire process, but if there’s no real reason to claim then the case may end up in court with the claimant being handed a County Court Judgement, and potentially a criminal record. This year alone, the average fraudster has been ordered to pay us in the region of £6k when they’ve been found to be dishonest by a judge. Yes, they may sell it as No Win No Fee, but the consequences of a ‘Loss’ are no laughing matter.
Winner, winner, chicken…nugget
So what happens where a claim is genuine and is settled in the claimant’s favour? We will arrange payment with the acting solicitor for both the compensation and also the Solicitors costs, but this is where the other side of No Win No Fee comes into play. We’ve had examples of claimants calling us up and demanding to know why the cheque they received from their solicitor is so much smaller than they were expecting. The truth is, buried in the small print of the contract they signed will be their ‘win fees’ – these are typically around 25% of any payment. The kicker is that Solicitors will always recover all their costs of business from the insurer during the settlement anyway (typically around £1k), so anything they manage to skim from a claimant is a complete bonus for them.
Hook, line and sinker
When all’s said and done, the only real winner is the CMC. From the moment they hook a client on the phone, they hold all the cards with none of the downside. They won’t be paying the cost orders against a fraudulent claimant, or stepping in to help out when we have to inform their employer to pay us a portion of their wages each month. What’s more they can, and will, pull out of any claim they don’t think will win – at any stage. We’ve seen instances where claimants are left high and dry on the court steps. And, if the claimant tries to pull out? Not only will the Solicitors pursue them for their costs, but any case brought to court is always the claimants to answer regardless of legal representation. In future, the directors in charge of these businesses could be fined substantially, but they’re currently making hay while the sun is shining.
The key thing to always ask is whether the CMC is acting in their client’s, or their own best interest. We’ve seen too many occasions where it’s the latter. No Win No Fee seems a distant memory when a claimant is standing on the court steps with no one to turn to. Maybe they should have hung up.
About Liverpool Victoria General Insurance Group Limited
Liverpool Victoria General Insurance Group Limited (LVGIG) is an LV= branded strategic partnership between LV= and Allianz Holdings Plc, following the sale of a 49% stake in LV=’s General insurance business on 28th December 2017, creating the UK’s third largest personal insurer with over £1.7 billion annual premium income and serving over 6 million customers.
LVGIG is a holding company employing over 3000 staff and incorporating two regulated insurance companies. Liverpool Victoria Insurance Company Limited (LVIC), registered in England and Wales number 03232514 and Highway Insurance Company Limited (HICO), registered in England and Wales number 03730662, both registered at County Gates, Bournemouth, BH1 2NF are part of the Liverpool Victoria Group of companies and are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. (LVIC FRN number 202965 and HICO FRN number 202972).
LV= and Liverpool Victoria are registered trademarks of Liverpool Victoria Friendly Society Limited and LV= and LV= Liverpool Victoria are trading styles of the Liverpool Victoria Group of companies.