Third-party capture

The Association of British Insurers (ABI) were reported to have launched a voluntary code of practice for insurers taking part in third-party capture on 24 June 2010.  For those who do not know, third-party capture is where the insurer of the party at fault for an accident contacts the other side direct to try and negotiate settlement without the involvement of lawyers.

The insurance industry do not like the term "capture", so call the process "third-party assistance".  The process is roundly criticised by many people, including the legal services industry.  The insurers seek to justify it on the basis that it will lead to swifter compensation than would be obtained if lawyers would be involved.  Given that they are often criticised for causing delays in claims brought through lawyers it is not hard to see where their interest lies.

The code is voluntary, which means it does not have to be followed.  It was supposed to be on the ABI's website, but when we went looking for it we could not find it.  On a search for "third-party" and "third-party assistance" the most recent document of relevance was a response in December 2009 to the report from the FSA on third-party capture where concerns were raised that innocent parties may be settling their claims without considering all of their options.  Put simply parties who have valid claims and do not know the process settle directly with an insurer in circumstances where they would normally be able to obtain legal advice either free or at the insurer's expense.

So what does the code require?  The insurers are supposed to:

• make initial contact by letter or phone call, not turn up on your doorstep or at the side of your hospital bed
• advise claimants of their right to seek independent legal advice
• make offers that are "fair and reasonable"
• strongly recommend a claimant seek legal advice if they are vulnerable (children, the handicapped or people who do not fully understand English), where there are issues over fault, where the injuries may be complex or require more than 1 report and where there are issues as to whether any injuries were caused by the accident

So, if you sustained anything more than a minor injury and they do not admit liability in full they should be telling you to take legal advice.  The only reason why a code is required to control this behaviour is because insurers have engaged in the past in exactly the activities they are now being asked to agree not to do.  What the code does not require them to do is explain that the victim is likely to incur no costs if they instruct an independent solicitor.

Feel free to look for the code yourself.  If you do manage to find it please let us know where it is so that we can update our information.  The ABI website is at www.abi.org.uk

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