Last week I read a couple of interesting articles in Insurance Post regarding the proposed fee caps being introduced by the Financial Conduct Authority (FCA) on Claims Management Companies (CMCs). Insurers are wary of an influx of CMC-related claims following the proposed whiplash reforms¹,  so this comes with little surprise.

Whilst the whiplash and small claims track reforms are being introduced to effectively enable injured parties to bring their own claims, some claimants are going to need help in what can be a daunting process, as most wouldn’t have had to make an personal injury claim before. Claimants need to be able to trust the system and many will seek greater assurance and advice to help them. So naturally CMCs will look to fill this ‘void’ in the market, which in turn could be an unintended consequence of the reforms. 

But is the increased control of CMCs, whether that’s by further regulation or controlling the level of fees they can take from the claimants damages, really the answer? Or is this even the right question? 

Let’s come at this from a different angle. Arguably, the safest, and most responsible solution to deliver the best customer outcome and to deliver against the basis of why the reforms are being introduced, is through Before the Event (BTE) motor legal expenses insurance (LEI). Often an undervalued product pre-reform, it’s now being perceived with increasing value as a post-reform insurance product. Let’s look at what motor LEI delivers; 

• Claimants get help from day one often provided by expert law firms.
• Claimants retain all of their damages recovered.
• As legal costs won’t be recoverable in the majority of Road Traffic Accident (RTA) claims, no additional cost is being added to the overall claims process, ultimately benefiting customers through lower premiums.
• Motor LEI can potentially help to reduce claim numbers and the operational pressure on motor insurer claim departments – solicitors have a duty to undertake adequate checks to assess for fraud and will weed out any unviable claims.

At ALP, we’ve been working hard with our business partners and solicitors to get the product right to ensure customer value will continue to be delivered post reforms and that all parties in the distribution and claims chain are recognised for their part in the evolution of motor LEI.

Motor LEI is now the vehicle (no pun intended) that enables solicitors to continue to play an important part in the claims journey, ensuring that the customer is appropriately and fairly represented through the entire claim process, whether the claim can be settled in the claims portal or not.