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Insurance firms face legal action over 'settling claims early'

INSURANCE companies engaged in "ambulance chasing" practices are set to be sued by car accident victims who claim they were pushed into settling claims early, before the true extent of their injuries was known.

The Irish Independent has learned that crash victims have instigated a number of cases challenging the legality of so-called "doorstep" settlements - those agreed within days or weeks of an accident while a claimant is still in hospital or recovering at home.

This news comes as a row escalates over alleged unethical practices in some insurance companies, including hospital visits to claimants by "triage units".

Yesterday Quinn Direct, owned by billionaire Sean Quinn, said that it would sue over allegations that it made payments to claimants' solicitors in return for quick settlements.

The company, which is the third-largest insurer in the State and made profits of over ?231m in 2005, also strenuously rejected allegations that it recruited serving gardai to investigate claims.

The litigants include those who settled claims at an early stage before consulting a doctor, and whose injuries progressively worsened after signing off on early settlement offers by insurance companies.

It is understood that the legal doctrine of unconscionability will form the basis of any claims.

This doctrine of unconscionability permits a court to refuse to enforce a contract if it feels it is unfair.

Certain classes of persons are also deemed by the law to have a limited ability to contract. These include children, those with a mental illness, and other vulnerable persons.

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A court considering whether insurance companies have acted unfairly will have to evaluate claims that they or their agents took advantage of their superior bargaining power to make settlements that overwhelmingly favoured their interests to the detriment of accident victims.

It would also have to assess the process through which such settlements were agreed, to establish if they are exploitative.

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Concerns about the aggressive tactics of insurance companies in offering settlements before a medical prognosis is made, have been raised in recent years.

The insurance industry has defended its practice of dealing directly with claimants to settle claims at an early stage, and says that insurance companies are willing to review original settlements if injuries are more serious than originally envisaged.

"From the perspective of insurers, the goal of early settlement of claims is not about minimising the amount of compensation paid but minimising the overheads associated with a drawn-out case," said a spokesperson for the Irish Insurance Federation.

"The establishment of the Personal Injuries Assessment Board and the introduction of the book of quantum has facilitated an environment which is more open to early settlement of claims.

"Insurers are finding in many instances that claimants are happy to have their claims settled earlier." An estimated 80pc of undisclosed claims are settled directly between insurance companies and claimants without the need for assessment by the Personal Injuries Assessment Board or the courts.


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