Is a Voluntary Code Enough? Road Accident Solicitors’ Concerns
Obviously, road accident solicitors and insurers are not always entirely in agreement about everything. However, there is one practice that so divides the two camps that they cannot even agree on what to call it. Insurance companies will refer to is as third party assistance whilst road accident solicitors go with the more fear-inducing third party capture.
Whatever its name, it is the practice of insurers directly contacting a third party with a claim against one of its policy holders making an offer of settlement. However, this contact is made very quickly after the accident happening, before legal advice has been sought. Certainly, there have been reports of claimants being called upon in their own home within hours of the accident.
Road accident solicitors have been concerned about the practice for years, saying that legal advice is vital. They also make the very valid point that insurers face an impossible conflict of interest in settling the claim. It is surely not easy to offer fair payouts whilst trying to keep payouts as low as possible.
Much to the disbelief of road accident solicitors, insurance companies claim that the compensation paid out this way is not lower than the settlements advised by lawyers. They also state that dealing with payments this way is quicker. But it’s not such a good deal if the settlement is unfair, according to road accident solicitors.
Usually, actions such as third party capture/assistance would be regulated by the Compensation Act 2006 which regulates claims management activities. However, insurers are already regulated by the Financial Services Authority.
The Association of British Insurers is shortly going to be introducing a voluntary code featuring guideline for the practice. It will set out how insurers should and shouldn’t contact victims and how to make sure victims are aware of their right to independent legal advice. No action will be taken against insurance companies which do not follow the code. However the FSA does claim it will be more likely to inspect the practices of companies which refuse to sign up to the code. Road accident solicitors are not confident that this is enough and will be closely following the practice.