Written evidence from Mark Thompson (CMI
30)
I am a claimant personal injury solicitor of 27 years
experience. I am now a sole practitioner having previously managed
a large personal injury department working for claimants. I have
an obvious interest in attracting clients to my practice. I also
use a marketing style of my practice, called Your Key.
I will limit myself to two of your four points:
- ¾ The
reasons and consequences of recent increases in the cost of motor
insurance.
- ¾ The
extent to which the cost of motor insurance is influenced by the
prevalence of road accidents, insurance fraud, legal costs and
the number of uninsured drivers.
I read with concern the "evidence" presented
to the Committee, available at
http://www.publications.parliament.uk/pa/cm201011/cmselect/cmtran/writev/591/cmi.pdf.
I am concerned the evidence submitted does not provide a comprehensive
picture. Too much of the evidence is based on selective statistics.
Statistics expressed as percentages are headlines, and opinions
based on estimates or anecdotes are of little or no value.
Here are some of my personal estimated statistics.
My ability to run 10 miles has been reduced by 90%, my lung capacity
has been reduced by 40%, and my life expectancy by 15%. Statistically
dramatic, particularly if I omit to tell you how many cigarettes
I smoke and my age.
One of the most dramatic statistics, and quoted several
times, tells us of an extraordinary increase in the injury cases
paid by an insurer called esure. To understand that statistic
you need to know esure has only been in the market for 10 years,
and has seen considerable growth in policyholders, particularly
in the last few years. It is therefore not surprising the claims
they receive and pay have increased.
My final point is that the historical information
gives no credit for the recent introduction of the "streamlined"
process for road traffic cases with a value below £10,000.
Rather than add to the lobbying I would like to assist
the Committee to gain a comprehensive view of the issues. I therefore
provide twenty two questions which I believe will assist in the
provision of a comprehensive picture:
- 1. What proportion of road accident claims
will fall into the recently launched streamlined process introduced
by the Ministry of Justice?
- 2. Are the figures provided by the Motor
Accident Solicitors Society accurate - 674,977 motor accident
personal injury claims of which 75% will fall into the streamlined
process, and if you do not agree what is the correct percentage?
- 3. If the average solicitor costs are no
more than £1,350 in cases settled within this streamlined
process, what difference would that make to the underwriting profit
and loss of insurance companies for their last financial year?
- 4. When figures are shown for cost of settlement,
do they include solicitor costs, VAT, police accident reports,
medical record fees, medical report fees, repayment for treatment
to NHS, repayment of State benefits under recoupment regulations,
and if so please identify the proportion of the cost applicable
to each of these elements?
- 5. Is the payment of referral fees a profitability
issue for solicitors rather than insurance companies?
- 6. Is it correct that referral fees cannot
be recovered from the "other side" and are absorbed
by solicitors as part of their marketing cost?
- 7. What proportion of referral fees are paid
to insurance companies, and what proportion to insurance brokers?
- 8. What is the amount in £s of referral
fees paid in the last three years to insurance companies, and
what is the amount paid to insurance brokers?
- 9. Is it necessary for insurance companies
and brokers to tell their customer that a referral fee will be
paid to them by a solicitor, and the amount?
- 10. The memorandum from the Auto Body Professionals
Club refers to "rebates required by insurers from suppliers
to the body shops repairing cars." Are such rebates received
by insurance companies, and if so how much in £s per annum?
- 11. Do body shops pay rebates on their invoices
to insurance companies, and if so how much is paid in £s
per annum?
- 12. How much commission is paid by credit
hire companies to insurance companies in £s per annum, and
how much is paid to insurance brokers in £s per annum?
- 13. Bearing in mind your answers to questions
7, 8, 9, 10, 11 and 12, is it accurate and fair to present your
figures on the basis of premium income against claims paid (underwriting
profit or loss)?
- 14. Which of the organisations presenting
evidence to the Committee are providing a fair and accurate picture
of the income and costs of insurance companies?
- 15. Of the evidence presented is the most
balanced response from the Auto Body Professionals Club?
- 16. Of those who make injury claims after
a road accident, what proportion first contact their own insurance
company?
- 17. How many insurance companies have contracted-out
the handling of these first telephone calls to claims management
companies?
- 18. How many insurance companies which handle
their own post-accident calls identify potential claimants and
provide a system to arrange credit hire, credit repair, and solicitor
representation?
- 19. Does either practice identified at 17
and 18 above have a tendency to increase the number of claims
made against insurance companies?
- 20. How many claims for compensation are
made by the route identified at question 17, and how many by the
route identified at question 18?
- 21. What proportion of each insurance company's
overheads is spent on identifying fraudulent claims?
- 22. If the Government introduce measures
which reduce the number and extent of personal injury claims,
reduce the costs paid to representatives of those claimants, how
do you suggest the Government should regulate the fairness of
motor insurance premiums in future?
December 2010
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