Insurance Post

Pre-med settlements are routinely undercutting claimants


Accident victims are routinely offered settlements by insurance companies that are several hundred pounds lower than the amount they are awarded if the case goes to court.

After reviewing thousands of litigated personal injury claims at each stage of the settlement process, Access to Justice has revealed that insurance companies are offering consistently below what solicitors achieved at final settlement.

Craig Budsworth, senior manager at True Solicitors and a member of the Civil Justice Council, warned that if government reforms to personal injury become law, accident victims are "much more likely to be at the mercy of insurance companies when it comes to sub £5000 claims".

In an analysis of cases where damages were awarded by the court, claimants won over £600 more from a court award than the insurer's final offer, and in excess of £800 more than the insurer's initial valuation, Budsworth said.

He added: "Our data shows that notwithstanding the criticism of the Transport Select Committee in 2013, the insurer's practice of making low pre-medical offers continues unabated with the average pre-medical offer of £1425 being less than half of what we are achieving for our clients at court."

"Our job is to hold our client's hand and advise them throughout what can often be a traumatic experience.

"The claimant always has the final decision on whether or not to accept an insurer's offer, but our research shows that claimants who have the benefit of legal representation will obtain their full entitlement to compensation, which is often substantially more than insurance company will offer."

A spokesman for the Association of British Insurers was not immediately available for comment. 

Budsworth said that by allocating all injury claims under £5000 to the Small Claims Court, where the injured party has to pay their own legal costs, the governments proposed reforms would "considerably widen the gap between offers made by insurers and the final settlement".

"Insurers will be confident that without the threat of a hearing in court before a judge, and without legal help, claimants will be pressured into taking lower offers, and not getting the redress they deserve.

"£5000 is around 20% of the average annual salary in the UK, and can cover some quite serious injuries."

Gerard Stilliard, head of personal injury strategy at Thompsons Solicitors, told Post: "This is a question of fairness. If insurers will insist on under-valuing legitimate injuries, then it is right that consumers have an independent solicitor in their corner.

"To remove this right for road accident victims would simply help to line the pockets of insurers' shareholders." 

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