Your say: Investing in claims at the front end

The fairly limited changes that have been possible thus far amply demonstrate the ability of the claimant lawyers' lobby to tug at the heartstrings and adopting emotive language, disguising their own vested interests as victims' rights and repeatedly advancing out the same David and Goliath arguments. So what else can be done?

Given that the cards are still pretty much stacked against an insurer, it is imperative they tactically position themselves so as to minimise adverse exposure.

Claims can, of course, go astray at an early stage and there will be many reading who know from experience that arguments can be lost as a consequence of poor investigation techniques, inexperience or a failure to explore all avenues of enquiry.

This inevitably leads to financial leakage and the claims handling process becoming unnecessarily protracted. In July 2012, the High Court in the Brit Inns case handed the industry a stern warning, refusing to allow full recovery of the insurer's outlay where it was apparent that the claim had been significantly overpaid due to lack of proper investigation.

What the insurance industry needs to embrace is that properly funding the claims process at the front end is not money wasted. The inclination for any business facing tight margins is to hit its providers - that is an economic reality and financial services business is no exception.

But it simply does not make commercial sense to jeopardise the defence or the beneficial settlement of a claim by aggressively streamlining fees, or by outsourcing cut price investigations to those that are not particularly experienced in the field and have limited understanding of the nuances involved.

The additional outlay, which could make a real difference to the outcome of a case, pales into insignificance compared to an unfavourable outcome and or the resultant legal costs. Why pay for horsemeat when it is labelled steak.

Recent reforms demonstrate insurers' instincts and ability to identify a problem and to collectively attack the cause. What is urgently needed now, is a willingness to invest more at the outset of a claim, rather than risk compromising the quality and thoroughness of the enquiries. There is no-one more adept than claimant lawyers at opening a door as another one slams shut.

Failing to properly fund the investigation of claims will leave them rubbing their hands: in many cases, the emergence of the truth is the last thing they want to see.

As the old adage says: fail to prepare - prepare to fail. So it's time for insurers to play even smarter. If they don't want to be backed into a corner further down the line and prevent fuelling the compensation culture by abandoning available arguments, they need to put in resources at the outset.

Information is power, but as Donald Rumsfeld once said, there are always unknowns we don't actually know about and if we want to find out, we have to pay. Seeing how claimant solicitors operate, the stark reality is that cutting back on claims investigation costs will likely be counterproductive in the long run. Invest early and save later. Don't risk giving our opponents the inch that could turn into a mile.

Tina Whelan
Director of operations and client services, MI Adjusting