The article "Consumers' watchdog calls for control on insurers" (The Lawyer, 11 August) gave the impression that the Consumers' Association (CA) is calling for regulation of all legal expenses insurance companies. This is a misleading reflection of the conclusions that have been reached in our recent report, "Legal expenses insurance: realising its potential".
The report highlights the need for greater transparency in policy wording and the way in which insurance claims are dealt with. Leaving matters such as claims handling procedures to market forces has the advantage of ensuring greater competition, but when already complicated legal claims become the subject of insurance the need for documentation and procedures to be clear and understandable is essential. We therefore recommend that the Government monitors progress in this field and, if self-regulation does not appear to be working, intervene as necessary.
In relation to uninsured loss recovery (ULR) companies, the CA highlights that this area of the industry has given rise to particular concern as not all companies are insurance companies or intermediaries. A ULR service may be offered by a garage or hire car company which may not be regulated in any way. Some solicitors are also entering into arrangements with garages for claims to be referred directly to them. It is questionable whether or not such referrals are allowed under the Solicitors' Introduction and Referral Code 1990.
In the process of preparing our report, we consulted both the ABI and the insurance industry and received support for our call for more effective regulation of certain areas of the industry. We hope that this clarifies the position.
Alison Lindley
CA lawyer and report author
