For most of my working life as a solicitor, I have queried the relationship between insurance companies and the law. Insurance companies want us to believe they are the guardians of our lives. Their advertising is littered with words and expressions suggesting they protect us, or they give us peace of mind etc etc.

Whilst insurance companies do provide some element of a safety net against some of life’s accidents, they are also, in my experience, the cause of much antagonism and dispute. There is a simple reason for this: profit. And when it comes to profit, we are back to the age-old battle between money and the law.

If profit is the motive, why would an insurance company fight all the way to Court over £205? This seems senseless. The cost of going to Court, surely, must be massively greater than a mere £205!

This is precisely what happened to my firm. We had paid out for a report intended to show the layout of a road. The insurance company denied the accident was their insured’s fault. The road layout mattered because it was necessary to show where witnesses were standing and therefore what they could see (or what they could not see). The insurance company settled the claim but refused to pay the report fee.

We pointed out to the insurance company that the fee is payable under the Court rules. The insurance company said (through their solicitors), in effect, we don’t care what the Court rules say, we are not going to pay – take us to Court if you like. So we did. We got our £205 plus the costs of having to go to Court.

If this was a one-off incident, then all well and good. It would be easy enough to say there was a rogue claims handler who just picked a fight. Or perhaps the claims handler in the insurance company couldn’t lose face by admitting that he (or she) had got it wrong.

But this is not a one-off incident.

The calculation made by the insurance company has nothing to do with the law. It is a shrewd financial judgement based on the knowledge that most solicitors, just like most non-solicitors, will not go to Court over £205. It is the behaviour of a corporation that does not give a stuff about the law, but knows that by the use of financial muscle they can save themselves thousands and millions of what matters most – pounds, shillings and pence.

Such an approach does not just apply to the petty details of my firm’s expenditure. It applies across the spectrum of claims made to insurance companies by those who have suffered real loss. And in these times of wobbly economic prospects, it is likely to get worse.

Article posted on Wednesday, February, 9th, 2011 at 3:27 pm

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