Claims groups’ bad press is no accident

Ambulance chasers; opportunists; leeches – just three of the many epithets used by the public to describe personal injury claims companies. But it’s not an image the industry believes is justified and it is trying hard to change it.

Last week, Claims Direct appointed AW Media as its media agency and is on the verge of appointing a new creative agency to create more targeted campaigns.

Last summer, The Accident Group appointed Cheetham Bell JWT to reposition the brand and create an alternative strapline to “Where there’s blame there’s a claim” (MW August 16, 2001). It is also reviewing its media arrangements.

The industry and in particular Claims Direct, received bad press in 2000 and 2001 about the way it operates and this has led to a period of reflection in the industry.

Claims Direct head of marketing Beth Powell says the company is carrying out research into how the public perceive it following the bad press coverage. This is likely to result in the scrapping of the “No win, no fee” strapline, which she says consumers “don’t trust”.

“Logic tells you the market has moved on because of the amount of press coverage, which at best has been confusing and at worst extremely negative,” she says. “Claims Direct needs to know what effects this has had on the consumer.”

She adds: “There have been so many mixed messages about ‘No win, no fee’. People understand that if they don’t win there isn’t a fee, but they don’t know what happens if they win.”

Getting the marketing mix right now is essential, as the industry is set to grow. In 2000, there were 744, 000 personal injury and illness claims, but analyst Datamonitor believes this will rise to almost 1 million claims by 2005. Datamonitor says that every year there are about 1.7 million accidents that could lead to a personal injury claim.

According to the research, companies such as Claims Direct and The Accident Group now handle 25 per cent of claims – helped considerably by multi-million pound marketing budgets that are leaving solicitors practices in the shade. Their work covers accidents at work, road traffic accidents and “slips and trips”.

Changes to the law have facilitated their growth. The Legal Services Commission says that legal aid for personal injury claims was scrapped in April 2000, except for clinical negligence cases and exceptional circumstances where the case has a wider public interest.

The “no win, no fee” route is therefore the most attractive to those that can’t afford solicitors’ fees of between &£80 and &£325 per hour, depending on the experience of the solicitor and where the practice is based.

Datamonitor analyst Vicki Summershayes says: “Personal injury companies have had an impact on the market because of the help and advice aspect of their work. People don’t always know where to turn, and these companies are flagging themselves up and offering to do the work for you. It’s a very complex area for people to understand, especially with the change in the legal aid law.”

But the industry doesn’t help itself. National Accident Helpline – a personal injury claims company – declined to comment about its marketing or the image of the personal injury claims industry. “We have our own opinions and don’t want to share them with anybody,” says head of marketing Alan Kennedy.

Kim Tasso, a marketing consultant who specialises in advising solicitors, says that high-profile advertising campaigns by the likes of Claims Direct haven’t helped.

She says: “It’s a very confusing area and the image of these companies as ambulance chasers has not been helped by the advertising. For straightforward claims they are a good idea. But what they won’t take on are claims that take years because of the cost.”

She adds: “The problem with solicitors is they are not very good at marketing and understanding what people want. However, companies such as Claims Direct understand how to deliver a service.”

But Claims Direct and The Accident Group ran into bad press because they take out after-the-event insurance policies for clients, which cost between &£900 and &£1,500.

Although the cost of these is supposed to be recouped when the losing party pays costs, defendants’ insurers often refuse to pay the entire cost of the policy because the same policies are available at a third of the price, if they are taken out independently by the plaintiff. The deficit is therefore taken from the client’s winnings.

The situation is now being investigated by the High Court, although the Consumers’ Association cannot comment on the issue because it has not investigated it.

The Association of Personal Injury Lawyers, which represents 5,100 solicitors, also argues that the sector needs to be regulated, as the people who assess claims over the phone are not legally trained. However, a review by the Government concluded that self-regulation was sufficient.

Mark Harvey, secretary of the Association of Personal Injury Lawyers and partner in solicitors Hugh Jones, says the companies have been their own worst enemies.

He says: “They had a good model where they were just being paid by solicitors who received referrals from them. But they went too far and started charging clients when it wasn’t necessary.”

But he adds: “The personal injury claims companies have made solicitors wake up and think about the service they provide. They have made solicitors step down off their pedestals.”

But bad press was enough to do damage to Claims Direct, which posted a loss of &£20.2m in the year to March 2001. The company has since reported an upturn in client numbers and is planning to introduce three types of insurance policy, the cost of which will vary according to the gravity of the case. The Accident Group is a private company and does not reveal its annual reports.

The personal injury claims companies have had a bad couple of years. It now has to modify its methods to ensure it does not appear to be profiteering from those it is trying to represent.

With solicitors sharpening their tactics and becoming more service oriented in order to compete, it looks as if the consumer will be the one who ultimately wins.