In September we reported on the introduction of restrictions (but not a total ban) on cold-calling by telephone and text messages, with our focus primarily on claims management companies (CMCs) in relation to prospective personal injury claims. The new rules came into effect on 8 September and provided consumers with a choice of whether or not to ‘opt-in’ to receive these calls and, if they did not opt-in and were still contacted, the right to complain.
The Information Commissioner’s Office (ICO) has recently published a report on what effect the rules have had.
‘Accident claims’ form by far the largest category of complaints received by the ICO. Between January and May of this year, total complaints each month averaged 7,726. Over the next three months (June-August) that average increased to 11,044. Then, as the rules came into force, September saw a surge to 16,963 complaints before a slight reduction in October to 15,772. September’s peak involved a similar number of automated and ‘live’ telephone calls and probably reflects a combination of CMCs trying to maximise cold-calling before the rules took effect and the media coverage which was then generated.
The drop off in October was in both automated and live calls but noticeably greater in the live category.
The ICO report confirms that a number of organisations have received notice of its intention to take formal enforcement action. Previous enforcement actions which have recently come to fruition led to monetary penalties totalling £310,000.
What does this mean for insurers?
If cold-calls which did not result in a recorded complaint are added to the ICO’s September and October figures, it may safely be assumed that claims farmers will currently be processing a high volume of potential claims. We are therefore likely to see a spike in ‘farmed’ claims before they subside as the result of the restrictions and enforcement action. By the very nature of their genesis, many of these claims will be dubious. Horwich Farrelly has established expertise in identifying those claims which should be rejected and what action should be taken to discourage further the activities of CMCs.