June 18, 2013
Following a road accident there are many organisations that try and make contact with those involved. These typically include the driver's insurance company, repair garages or vehicle hire companies.
Increasingly however, insurers of the driver who was at fault are contacting the injured people directly and making offers to settle any potential claim for personal injury at that time. This process is called 'third party capture' or making a 'pre medical offer'.
Often insurers will suggest that dealing with them directly will be cheaper, easier and quicker than involving a solicitor. This may sound tempting and many injured people agree to these settlement offers, but as with any dealings with insurers we must look behind the financial offering to see the real reason for wanting to conclude a personal injury claim so quickly.
Why would insurers not want solicitors involved?
Whereas Solicitors have both a moral and regulatory duty to act in the best interests of their clients, insurers have no such duty to people injured by the negligence of their policyholders. So it can make perfect fiscal sense to simply try and 'buy off' any potential claims as quickly and cheaply as possible.
In essence this is a numbers game and insurers hope that an early settlement will reduce their financial exposure and ultimately mean a cost saving to them.
This leaves injured people at considerable risk of settling their personal injury claim at significantly less than its true value. Internal figures here at Spencers Solicitors show that that where an insurer makes an initial offer to a client, and that offer is rejected, on average we secure more than double the insurer's offer (a 106% increase) when the claim reaches settlement.
These pre medical offers are usually made very soon after the accident when the true nature and extent of the injuries are not apparent. As the name suggests, they are also made without any medical professional being involved so there’s no diagnosis or prognosis of the actual injury.
This lack of certainty means that the offer will be extremely speculative and carry a considerable risk that the claim will be settled for much less than its appropriate value.
How beneficial are pre medical offers to an insurance company?
To help demonstrate, here is a summary of a case my team recently dealt with:
• A client had an accident and (fortunately) contacted us direct to pursue their claim
• Shortly after the accident and out of the blue our client received an offer of £1,300 from the other driver's insurance company in full and final settlement of the claim
• Upon our advice this offer was rejected and we proceeded to obtain medical evidence on our client's injuries
• After thorough investigation into all our client's losses and with a professional medical prognosis, we were able to comprehensively assess the true value of the claim
• This resulted in our client's claim ultimately achieving a settlement of £19,500
In this case, the initial offer made by the insurance company amounted to just 7% of the actual claim value. Also the insurer practice of providing injury compensation without requiring medical evidence is only ever going to provide them a short-term cost benefit, and may open the door to longer term problems of fraudulent claims. And fraudulent claims are regularly quoted as a factor by insurance companies for justifying rising insurance premiums.
It is for this reason that I always urge anyone injured in a road traffic accident
to instruct a specialist and independent solicitor rather than seek to negotiate with an insurer directly. By doing so, they can be confident that when a financial settlement is reached it is at a level that is most appropriate for their injuries, and not at the level which saves the insurance company the most money.