The Number of Claims Companies Reduces

by Donnareflect on December 5, 2013

As the majority of people operating within personal injury claims are aware, one of the biggest problems facing the industry right now is that of fraudulent claims and the unscrupulous companies who make them on behalf or both suspecting and unsuspecting clients.

Of course, for every company and person who makes a fraudulent or enlarged claim, there are just as many who are operating within the law. However, with these over-inflated claims pushing up insurance prices, giving personal injury solicitors Kent a bad name and undermining the industry as a whole, it seems only right that something be done to tackle the problem, sooner rather than later.

The Government Solution

To that end, the Government, via the Ministry of Justice, have announced a series of several measures which they hope will discourage poor quality claims, as well as the people who make them.

Key among these are cutting legal aid, changing the way that evidence is given and presented in cases such as whiplash and limiting the amount that can be claimed for certain injuries and accidents.

However, the Government has also announced a consultation to introduce further measures, including proposed fines for unscrupulous companies,. It is their hope that these measures will add further regulation to the industry and improve the reputation of Kent lawyers who are merely trying to get the best possible solution for their clients

The moves and the consultation are all part of the Ministry of Justices’ Conduct Rules which were introduced in July and apply to all solicitors and law firms in Kent. However, whilst it has been stressed that the reason for the Conduct Rules is to tighten up an industry with little regulation those legitimate Kent Solicitors who take their reputation and their clients’ wishes seriously should have little to worry about and few additional responsibilities.

At the same time as the introduction, an interesting trend has also emerged – the number of claims management companies closing their business.

A loss of 38%

A report compiled by the Ministry of Justice has found that despite the personal injury sector remaining the largest with 1485 firms regulated and 2350 in total, there has been a significant drop in the number of companies practising.

In fact, the latest personal injury news shows that within the last year, 38% of UK claims management companies have ceased trading. In addition, the report also showed that the total revenue of the PI sector has also dropped significantly, by 22% in the same period.

The Ministry of Justice claims that the closures and the additional measures coinciding are purely coincidental, saying “Most of the CMCs that have exited the market were small businesses, which had either ceased trading altogether or were focusing on the credit hire/bent metal aspects of accident management.”

The report went on to say “Six months into the ban, we have observed a shift in business practices. CMCs have amended their models to make them compliant with the ban, using for example, marketing schemes and service agreements.”




Digital Marketing Executive at Reflect Digital

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