Reducing the share of court payments under compulsory motor liability insurance — what is behind this? Expert opinion

CrimeaPRESS reports:

The share of court payments under compulsory motor liability insurance has decreased significantly in Russia. Over six years, from 2017 to 2023, the national average decreased by 4 times, from 20% to 5%. While back in 2016, insurers reported an exorbitant share of legal payments and the active work of lawyers specializing in litigation against insurance companies. What helped radically change the situation for the better?

The high level of legal payments in such a massive and compulsory type of insurance as compulsory motor liability insurance could indicate increased activity of insurance fraudsters, since they considered their main task to be transferring the dispute to the court site. According to the Russian Union of Auto Insurers (RUA), the emergence of a financial ombudsman helped to significantly change the situation, which immediately reduced the share of court payments in 2020 under compulsory motor liability insurance by more than three times, from 20% to 6%.

As insurers clarify, the positive action of the institution of financial ombudsman has a delayed effect. The initial purpose of introducing the new pre-trial procedure was to reduce the burden on the judicial system. As the institute developed, its significant modification occurred, for example, the positions taken by the service when considering appeals were unified, and IT integration was implemented for the rapid exchange of information between insurance companies and the financial commissioner. Thanks to these innovations, the level of trust in the Financial Ombudsman Service has increased significantly both on the part of consumers and insurance companies, which has led to a decrease in litigation.

If we talk about the situation in individual federal districts, then in some regions the decrease in the share of court payments has become more significant than in the country as a whole, for example, in some regions the decrease occurred by about 20 times, for example, in the Volgograd, Amur regions and the Republic of Crimea.

A high share of legal payments may indicate a high level of fraudulent activities under compulsory motor liability insurance. As the RSA clarifies, in 2023, despite a decrease in the share of court payments, unfair practices in obtaining compensation from insurers have intensified. Zetta Insurance notes that as a result of the activities of unscrupulous “car lawyers,” completely unnecessary negative consequences may occur for respectable motorists.

First, they will pay income taxes on the entire amount the insurance company pays out for their case, not just the money they receive from the auto lawyer. Secondly, since unscrupulous intermediaries always use illegal practices to artificially inflate the amount of payment, and act on behalf of the client, the car owner’s insurance history may be damaged— said the company.

One of the work patterns of an unscrupulous auto lawyer: he describes to the client the difficulties in receiving payment, while exaggerating them. Next, the “automotive lawyer” offers the victim an immediate payment from his own pocket for drawing up a power of attorney to represent interests in the insurance company and in court regarding the insurance payment. At the same time, the amount offered by the “car lawyer” may be several times lower than the actual payment from the insurance company. Therefore, in the event of an accident, motorists are advised not to use the services of unfamiliar intermediaries, who sometimes arrive at the scene of the accident even before the traffic police.

Despite this, Absolut Insurance believes that the share of legal payments will decline in the future, which will be facilitated by the stabilization of the economic situation and adaptation to new conditions of economic restrictions. “Regarding the insurance market, it should be noted that insurers have learned to use judicial experience in a positive way to adjust internal processes and reduce the volume of litigation,” the company commented.

source: press service of the Information Project “OSAGO: Public Expertise”

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