Dominic Clayden, claims director at Aviva.

East Anglia: Insurer calls for a big shake-up of system

Friday, February 15, 2013
4.18 PM

Motor insurance premiums could be slashed by up to £60 a year by cutting out lawyers and claims management companies, according to Aviva.

The Norwich-based insurer has outlined proposals for a shake-up of the way personal injury claims are handled by making claimants deal directly with the “at-fault” insurers, rather than third parties.

In a report published yesterday, Aviva said whiplash claims currently added £118 to every motor premium – while its plans would seek to strip away about £1.5bn in excess costs.

But partners at two law firms in Norwich said the move would leave claimants out of pocket because insurers would be tempted to under settle.

Dominic Clayden, claims director at Aviva, said: “Our figures for average compensation settlements show that dealing direct with an insurer results in at least as much compensation for the claimant and has the advantage of being quicker –meaning their treatment and rehabilitation can start almost immediately. Our focus is on their recovery and settling their claim quickly and fairly. It would also prompt a significant reduction in the costs of the current system which would benefit all UK motorists, who will begin to see a reduction in their premiums.”

As well as cutting costs, Aviva’s ‘Road to Reform’ report calls for the introduction of a “truly independent panel of medical experts” to deal with whiplash cases.

Meanwhile, its research of 400 drivers who had made a personal injury claim revealed that 33pc spent their money on medical treatment, 29pc used it to pay-off household debt, and 12pc bought luxury items like TVs.

Stephen Green, head of the personal injury and professional negligence department at Fosters Solicitors, said the Aviva report had nothing to do with lowering premiums, but was about cutting its own costs.

He said: “The insurers will be tempted to under settle whenever they can and the victim, who is neither a legal nor a medical expert, will have no idea whether the offer made is fair or not. This practice is not new. It is called ‘Third Party Capture’ – the clue is in the name and the insurers have been doing it surreptitiously for years.

“This is not about lower premiums or rehabilitation. It is about insurers reducing their costs and increasing their profits.”

Meanwhile, Colin Cook, partner at solicitors Hatch Brenner, said: “Claimants don’t always know what their loss is worth, and I have had experiences where insurers will undervalue a claim when the claimant could get a more favourable outcome by obtaining advice from a lawyer.”