Brokers Vs. Claims Companies

Image of IphoneAlmost everyone these days knows the frustration when receiving a call from an ‘0800’ number or ‘no caller ID’ and it has even gone as far as receiving texts and WhatsApp messages from these nuisance companies. Whether it be a real person or a recorded message at the other end of the phone it normally starts with something along the lines of ‘have you been in an accident recently’? Most people will just hang up the phone however there are some that have actually been in an accident and are potentially owed some money.

An ABI commissioned survey has shown that 83% of people are contacted by claims management companies. These companies spend their time encouraging people to claim for compensation for most types of accidents. With 92% of people saying that the call was completely irrelevant to anything in their life and 83% feeling these calls are unacceptable and that something needs to be put into place to stop them.

James Dalton, the ABI’s Director of General Insurance Policy, said: “These shocking findings show that, despite recent reforms, the UK’s compensation culture is alive and well and continues to thrive. For too long, too many people have been plagued by these nuisance calls and action is needed to clamp down on them. The industry fully supports genuine claimants receiving compensation in a timely and proportionate manner, which is why we have campaigned for the changes to our civil litigation system.

“But the continued behavior of some claims management companies encourages fraudulent and frivolous claims that push up the costs of insurance for honest customers. We will be working with the Government in their review of the claims management sector to ensure that this day-to-day nuisance is tackled once and for all.”

False claims are not only harming the regular customer but also insurance brokers too. These companies are pushing people to claim which could eventually make the insurance industry more expensive. There is a vast amount of money being paid out that perhaps would not be if customers were not being pushed into claims they had not even considered previously.

Brokers are reminded to work closely with their underwriters to ensure that any claims being paid out are legitimate. The more people who claim means a bigger loss ratio which will inevitably lead to an increase in premiums and encourage customers to shop around when looking at policies.

Previously, the Government has cracked down on false whiplash claims in which apparent ‘tough new rules’ were set by the Claims Management Regulation to prevent regulation companies presenting poor quality claims. These claims cause delays to genuine applications which, in turn, slows down the whole process.

Therefore, tougher rules must be set for claims companies to ensure none of these issues occur. They should not be able to pester people about false claims and should not be allowed to offer “no win, no fee” bonuses.

Recently laws have been put in place for any claim companies that are breaking these rules. A director of a claims firm who are producing documentations that are not real could receive a 12-month jail sentence. Claims company The Hearing Clinic has been found to constantly pester people by calling them and encouraging them to make a claim and has been fined £220,000 after hundreds of complaints. These measures will hopefully be the stick companies need to prevent them behaving this way in future.

Photo by Pixabay

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