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Tougher laws bring tougher times for Claims Management Companies

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With figures announced today by the Claims Management Regulation Unit (CMRU) that show the number of Claims Management Companies (CMC’s) closing in light of tougher laws around personal injury, Andy Munden, Partner in the Personal Injury team, reflects on exactly what the changes mean for members of the public and the future of the industry.

“The Personal Injury sector has faced some dramatic changes since April this year,” begins Andy.  “The new laws that were introduced saw a ban on referral fees between lawyers and CMC’s, and this is ultimately what has caused the demise of several hundred CMC’s, with the number of companies handling personal injury claims falling from 2,435 in March 2012 to 1,700 in June this year.”

The law also saw changes to ‘No Win No Fee’ arrangements, and the structure behind how the lawyer representing the successful claimant is paid, with the success fee and After the Event Insurance Premium no longer coming from the opposing parties insurance, but instead will now come out of the compensation awarded to that successful claimant.

“The theory behind this law was to bring down insurance premiums, as the insurance company will no longer foot the bill for a significant part of the legal costs,” continues Andy. “This reduction in premiums however, is yet to have actually happened. Hopefully Insurers will keep to the promises they gave to the government that they would bring down premiums if these tough changes were bought in.”

“As a firm we agree that insurance premiums can be very high, and anything that can be done to bring down the cost is a move in the right direction.  While this has meant that the market is tougher, and consequently a high number of CMC’s closing, it’s likely that it’s the structure and very nature of CMC’s that has led to their downfall.  Unlike CMC’s who are effectively a call centre there to filter out calls, it is the dedicated Personal Injury law firms such as us that will stand the test of time.  We offer a service to our clients, and the fact that the team at Warner Goodman LLP has a combined experience of over 100 years only proves that our way of working does produce results.

“The industry is seen as growing the so called compensation culture, but when people get injured it does have a real financial and emotional impact on their lives.  People may not be able to attend work because of their injury, it can affect their relationships, and they may need specialist treatment or psychological help.  What we do through our service is to help them return to the position that they were in before their accident happened, emotionally and financially,” concludes Andy.

If you’ve had an accident that wasn’t your fault and would like to discuss a claim, contact the Personal Injury Team on 0800 91 92 30 or visit the website


This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.