A personal injury law firm has urged those in the insurance industry to wake up to the changes in the legal market and consider whether alternative business structures (ABSs) and other arrangements with lawyers offer them a lifeline.
A report published yesterday by north-west practice Antony Hodari – in the wake of insurers such as Admiral and Ageas announced ABS joint ventures – said insurers need to act while the market is still sorting itself out or risk losing ground to their competitors.
The firm found “a great deal of uncertainty in the insurance market” about how to respond to the changes ushered in on 1 April by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).
Research undertaken for the report found that if an insurance business looks to partner in some way with a law firm – whatever the precise structure – there are certain fundamentals that need to be in place. Insurers quizzed for the report said their key demands of potential law firm partners include a strong leadership team, guaranteed and specified revenue streams, a trusted relationship and streamlined systems.
The report concluded: “Whether insurers, brokers and lawyers like it or not, change is being thrust upon them this year and they need to consider very carefully what their response should be. It could be that doing nothing is right for a particular business, but that needs to be a positive decision, rather than one made out of apathy.
“Pundits’ predictions for the future of the PI market are generally consistent: the end of the claims management company (CMC) as we know it today (except the genuine solicitors’ marketing collectives, as they should escape the impact of the referral fee ban); consolidation among law firms, CMCs and brokers; and ABSs of various types, and particularly joint ventures.
“Once the full shape of the reformed civil justice regime is known – and that could yet be some time depending on when the decision on raising the small claims limit comes – then investors will probably rekindle their interest too.
“The time to act is now while the market is still sorting itself out. Delay will let others take the initiative and establish operations that may be hard to catch up with. Perhaps ABS really stands for Actual Business Survival.”
Mark Grover, CEO of Antony Hodari, says: “The LASPO reforms are now with us and insurance professionals will have started to feel the effects. They cannot just let the world change around them and the report shows the different strategies and options open to them – as the report says, action isn’t necessarily vital, but thought is. There is real potential for new relationships between solicitors and brokers, for example, and that is certainly where we see the future.”
Last week Antony Hodari itself unveiled its new strategy , working in partnership with brokers and insurers rather than paying for work from claims intermediaries.