Wednesday, 29 August 2018

Claims, Claims and Higher Costs...

I see many advertisements for companies who promise to help with personal injury or other claims.  Are these really adding any value?

Yes, you might say. They help “victims” to obtain compensation that is “rightfully” theirs.  I understand this and, to an extent, agree.  After all, I’m no legal expert when it comes to knowing when I’m entitled to compensation for workplace accidents or unethical sales practices.  If I can get financial compensation to which I’m “entitled” (even though the corporate behemoth who caused the problem won’t tell me), then why not?  It doesn’t hurt anyone else apart from the “transgressor”, right?

Not necessarily.  

The claims specialists that act on my behalf on a “no win, no fee” or “you get the full compensation” basis make their money by adding their fees to the final claim on which the company against which I’m complaining (or they’re complaining on my behalf) has to pay out.  Even the pay-out may well be settled by that company’s insurer. 

This means that eventually the insurance company has to start raising its premiums, as it has to account for the extra fees of the claims specialist.  That results in higher costs for us to insure ourselves.  If, like me, you hardly ever claim, it means that you’re paying the salary of someone else who makes their living by adding little to the economy.

It’s tempting to use claims specialists to pursue a claim which you may think that you have, but in the end, it ends up adding to everyone’s bill.  Why would people use them?  Several reasons:

·     Lack of knowledge of what their rights to compensation may be;
·     Saves time (someone else does the “legwork” on your behalf);
·     May result in higher compensation than they would have won if claiming themselves;
·     Greed.

The easy answer is for people not to use claims specialists.  However, this is unlikely to happen.

What would be more useful is for the same claims specialists to share their data (insofar as confidentiality allows) about whom they pursue claims against and the amount of compensation extracted.  In this way, organisations with poor safety records or high levels of claims against them would be known and people could make more informed choices on whom to work for.  Insurers could then raise the premiums of those companies, rather than across the board.

In the case of car accident victims, the information shared could include the type of injury, vehicle and area in which the accident happened.  In this way, we would know whether certain vehicles were more often involved in accidents, or where particular “accident blackspots” were to be found.  Insurers could use names of claimants to track whether certain people were “victim specialists” and using the system to extract compensation wherever they could.

In the UK, banks accused of mis-selling Payment Protection Insurance (PPI) set aside billions to pay compensation.  The claims specialists involved could publish data on which banks they were seeing the most claims against (in terms of numbers of claimants andin terms of value) as well as in which area to help determine where the main problems lay.

Why not insist that claims specialists share their data to benefit society as a whole?

I have spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With more than 20 years in the world financial services industry running different service, operations and lending businesses, I started my own Performance Management Consultancy and work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email. My websiteprovides a full picture of my portfolio of services.  For strategic questions that you should be asking yourself, follow me at @wkm610.

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