Evidence submitted by Allianz Cornhill
Legal Protection (ACLP)
Allianz Cornhill Legal Protection (ACLP) are
a trading division of Allianz Cornhill. ACLP specialises in underwriting
Legal expenses insurance. ACLP have underwritten "before
the event" insurance since the late 1980's and in April 2000
started underwriting "after the event" insurance for
personal injury cases.
ACLP ate arm deal with approximately 700 solicitors
practices of varying size. We are the underwriter for the National
Accident Helpline scheme, and have other intermediaries who promote
our policies to their solicitors on a delegated authority basis.
The solicitors who use our ATE policies are obliged, by the terms
of their contract with ACLP to only use our policies for all their
clients so as to prevent selection against us.
We would like to respond to the following terms
of reference:-
Q1. Does the "compensation culture"
exist?
— Our view is that the press have coined
the phrase "compensation culture" as a headline. There
have been abuses of the system by certain claims management companies
whose business models have been sustained through encouraging
people, who relied on the advice provided by the CMC, to bring
a claim.
— As in all walks of life there will
be those who are clearly fraudulent. And of course this must be
prevented. On the other hand it is right that people who are injured
through the negligence of another party know that they can claim
compensation.
— We have no statistics on this tranch
of business prior to 2000. There were the spikes in 2000 (caused
by new access to justice and the mopping up of claims still within
limitation); and in 2001-03 caused by TAG and CD activity. But
2004—05 shows a more "normal" level of cases insured.
This experience is supported by independant research companies
such as Datamonitor.
Q2. What has been the effect of the move
to "no win no-fee" Contingency Fee Agreements?
— Please note that the word used above
should be "conditional" not contingency.
— There have been a number of technical
challenges brought by liability insurers which has caused some
unrest amongst ate underwriters. The removal of the CFA regulations
from Statute to the Law Society Rules should create more certainty
provided clear guidance is provided by the Law Society to their
members.
— Market research carried out by us
earlier in the year indicated that customers were uncomfortable
with the level of paperwork involved to enable them to bring a
claim and were not aware of the need to have insurance unless
the solicitor discussed this with them.
— ACLP would like it to be a requirement
that all CFA's are backed up by an ate insurance policy which
indemnifies the client for 3rd party costs and un-recovered disbursements
should they lose their case.
Q3. Is the notion of a compensation culture
leading to unnecessary risk averseness in public bodies?
— ACLP is not in a position to answer
this.
Q4. Should firms which refer people, manage
or advertise Conditional Fee Agreements be subject to regulation?
— The regulator should be entirely
independent and not partly a trade body.
— Regulation should not allow those
who do not want to be regulated to avoid this by having their
business registered and operating outside the UK jurisdiction.
— In addition to requirements outlined
in the bill it should include a requirement for:
— the CMC remuneration method to be
transparent.
— The full trading address to be available
on the internet and on all paperwork—a lot of CMC's operate
on a "virtual" basis; and
— if they do offer "insurance"
full details of the provider should be given and with their credit
rating, solvency and where they are located.
Q5. Should any changes be made to the current
laws relating to negligence?
— The definition of negligence should
remain as it is—the wording of the compensation bill which
refers to widening the terms for negligence will just open up
another can of worms which will need interpretation in the courts.
The clause "- desirable activity" could refer to one
wanting to go to work!
Divisional Manager
November 2005
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