Your Key in a changing legal world

Changes in the law of compensation claims from 1 May 2013
These chages only apply to accidents in England and Wales. Compensation cases elsewhere are more straightforward and Your Key can help as it always has.
Changes have been made for road traffic accident compensation cases with a value below £10,000 from 1 May 2013. Road traffic cases with a value up to £25,000 are to be treated in a similar way after 31 July 2013.
Employer’s liability and public liability cases with a compensation value up to £25,000 are join this new process from 31 July 2013.
These cases are to be handled on an online process called the Portal.
For these “lower value” road traffic accidents the fees payable to Claimant solicitors have been  cut from £1,200 to £500. The change does not affect the amount of compensation claimants can obtain, but it does effect the economics of these cases.
The fees have been cut to answer the complaints of the insurance industry. They say reduce the cost of claims and vehicle insurance will become cheaper. They argued so hard that these referral fees are now prohibited by law. What the insurers  forgot is that they have been the major recipients of referral fees when they sold compensation  cases to solicitors.
The other big change is that success fees on conditional fee agreements, and premiums for legal cover can no longer be recovered from the party paying compensation and costs.
So Claimants will be faced with new options if they want to pursue a compensation claim using a solicitor:
  • The service will be provided by junior staff.
  • The service will be provided as cheaply as possible.
  • You may be asked to pay a success fee to your solicitor from your compensation.
  • You may have to pay a percentage of your compensation to your solicitor – up to 25%.
  • You may have to pay the premium for legal cover.
The biggest change will be hidden from you, and this change is to the independence of your representatives. Those outfits who used to make money from referral fees are joining with solicitors and setting up businesses to share the income from handling compensation claims. This means insurance companies, legal expenses insurers, and claims management companies will be pairing up with law firms. The fees will be lower but these players still want their cut. You should always ask if a solicitor in business with one of these organisations acting independently and in your best interests?
From 31 July 2013, the portal will be extended to include road accident claims worth up to £25,000, plus employers’ liability and public liability claims.
The Government claims these changes are designed to bring down insurance premiums, and clean up the business practises in the compensation world. You might also find the insurance industry used its muscle and influence to reduce the claims it pays.
The last change to tell you about is a significant reduction in the liability of Claimants to pay legal costs if their case is not successful. If you lose you will no longer have to pay the other side’s legal costs. You will only have to pay costs, and only to the extent of compensation awarded, if you do not beat an offer made by the other side on fault or the amount of compensation, or if your claim is shown to be exaggerated or fraudulent.
To add to this the chances of paying such costs are reduced as most cases will be handled within the online facility called the Portal, and within that process there is no risk of paying the other side’s costs. The risk only arises once Court proceedings are issued. So legal costs insurance is only of apparent value if your case is less than straightforward on the question of fault, or the compensation value is beyond £25,000 (our educated guess is that only 10% of claims have a value beyond £25,000).
So how do these changes affect the Your Key offering. To date Your Key has earned commission from hire and repair of vehicles, and from referral fees from solicitors. We used to provide free legal cover, and then moved to arranging this when a claim was made and recovered the premium as part of the legal costs. What we will now do is put legal cover in place if you need it and without cost to you.
Your Key offers independent advice. We will arrange the services you need after an accident if another driver is at fault, and make sure your insurance record is not damaged. We think legal cover may be of benefit in a limited number of cases, and we will then arrange it for you. That is a better deal than you buying over-priced legal cover on each vehicle you insure.
Your Key is rare as we tell you how the claims industry works; we are always trying to save you money; and will advise you how to keep your insurance record in good order.