Insurers face backlash after 'staggering' claims increase report

The ‘staggering’ increase in claims revealed by the Institute and Faculty of Actuaries has sparked a backlash against insurers, reopening the debate over who is responsible for the explosion in claims.

A report by the Faculty of Actuaries revealed yesterday that third-party accidents involving bodily injury soared 18% between 2010 and 2011.

There was also a 9% increase in the average cost of small third-party bodily injury claims. All of this was against a backdrop of an 11% decrease in third-party damage claim frequencies.

The report largely blames claims management companies. But personal injury solicitors and the Claims Standard Council today castigated insurers for using third-party capture units.

Tom Jones, partner at personal injury law firm Thompsons Solicitors, said: “We, the trade unions and industrial injury support groups have been saying to government for years that if there is a compensation culture it is in low value RTA claims. 

“The driving force for the, also staggering, 43% increase in motor claims between 2007 and 2011 (Compensation Recovery Unit statistics) are the activities of claims management firms and insurance companies’ third party capture units each in turn encouraging people to make claims.  In other areas of personal injury, claims have fallen.”

Claims Standards Council policy director Andy Wigmore said: “Insurers wanted to compete with claims management companies, so they set up third party capture units, and they’ve got very good at it indeed.

“So the cost per acquisition for a claims management company has gone up, that’s because simply, the insurers have got better at capturing their own cases.

“If one insurer is against another, they are going to maximise that claim as much as they can. Everybody plays against each other, because the ‘money go-round’ is so beneficial.”