Full details of the case study (no. 1) and the solicitor’s invoice can be viewed here.
The invoice was prepared following advice given under the terms of a legal insurance policy. The sum of money in question was approximately £1500.00 and there were no complex points of law to be considered. Even without VAT the solicitor’s bill which was paid in full by an insurance company was £3197.50. By today’s standards this is not an extortionate sum but nonetheless it is a lot of money. A large proportion of the solicitor’s bill was attributable to a lengthy report to the insurance company rather than getting the job done.
This sum takes no account of the hidden costs that the insurance company will have occurred in terms of such things as speaking to the client, liaising with the firm of solicitors, monitoring the progress of the case and physically paying the bill.
This is not an untypical case and this scenario is doubtless being repeated on a regular basis across the UK. It does not represent good value for money for either insurance companies or their customers, who are asked to pay higher premiums. Cases such as this should be referred for either mediation or facilitated meeting at the first available opportunity. ASM Plus takes the view that an outlay in excess of £3000 to recover £1500 does not amount to good value for money. Twenty such cases equate to £60,000 being paid out to recover £30,000.
In a case such as this one, a half day online mediation would have cost £250 plus VAT. Early resolution by this means would have saved the company in question around £2750 plus VAT.
As regards individual disputes that internal staff cannot resolve promptly, the key to an insurance company deriving the best possible use from ASM Plus’s expertise and promptness is to strongly advise those involved in disputes, big and small, to try and resolve matters informally.
Customers who for whatever reason cannot resolve matters informally should be strongly recommended to contact ASM Plus with a view to a promptly convened mediation or facilitated meeting. In some instances, the terms of a policy may well sanction or facilitate such a recommendation.
Insurance companies do have the option of including a “compulsory” mediation clause in their policies.