Are No-win No-fee Claims Lawyers Depriving Insurers of Profits?
According to a recent survey by the Automobile Association (AA), there has been a significant rise in the number of insurance claims, often involving large settlement costs. It is these claims, suggests the AA, which are responsible for the rising cost of motor insurance.
The AA's British Insurance Premium Index, used to track car insurance premiums, found that they took their biggest ever upward jump during the last three months of 2009.
It found that the average quoted premium for an annual comprehensive car insurance policy rose over the fourth quarter by 7.2% to just over 1,000 pounds. In addition, the average quoted premium for Third Party, Fire and Theft (TPFT) cover rose by 8.9% to 1,252 pounds . But why have the figures climbed so steeply?
Blaming The No Win No Fee Claims Lawyers
Some insurers seem to believe that no win no fee solicitors are depriving them of their profits by enabling motorists to launch personal injury compensation claims.
Their argument is that the development of a system where claimants can pursue compensation without incurring any costs if they lose has opened the door to many who previously might not have bothered making a claim.
They believe that it is the growing number of claimants and successful claims that are forcing them to increase the cost of insurance, in order to maintain their profits.
The no win no fee claims fraternity have reacted angrily, saying that it is a victim's right to seek compensation if he has been injured by another party - regardless of how large or small the injury may be.
However, there could be another factor that both parties have overlooked. While it is certainly true that there have been an increased number of claims since the introduction of no win no fee solicitors, the National Fraud Authority have also released figures that show an increase in the number of false claims made.
These are supported by the Association of British Insurers, who estimate that fraudulent insurance claims cost the taxpayer around 2 billion pounds per year; equivalent to 44 pounds of every household's insurance budget.
While recent months have brought cold and hazardous weather with them, surprisingly the AA's figures show an underlying trend towards fewer accidents. Yet during the same period claims have increased by up to 30%.
The question remains: how many of these were from unscrupulous claimants, trying to cash in on a system designed to help those who might not otherwise be able to afford a personal injury claim?
It seems that both the insurers and the compensation claim specialists have valid points. From the insurers' point of view, there is currently not enough money to be made in insurance as there are so many payouts to be made, and the situation is untenable.
From the No Win No Fee Claims solicitors' perspective, everyone is entitled to pursue a claim and the no win no fee system gives them the opportunity to do so. However, the person who feels the financial result of this situation is the motorist through higher premiums.
And yet it seems that the real villain of the piece is the dishonest claimant who, through seeking to make a 'quick buck', is making things harder for the rest of us.
About the Author:
We deal in a range of claims, including personal injury claims and compensation. Please visit http://www.1stclaims.co.uk for further information.
Article Marketing
10 people like this article
