Third-Party Capture: The Other Insurer Calls You First

After a collision the other driver's insurer sometimes telephones the injured party directly, offering to handle everything. The practice is known as third-party capture.

Why an insurer makes the call

Settling directly avoids the claimant's legal costs, which in many jurisdictions the losing insurer pays. Removing lawyers from the claim removes a substantial part of the bill.

Early contact also means settling before the claim has been fully developed, at a stage when medical evidence is thin and the claimant's expectations are unformed.

Insurers also argue, with some justification, that direct settlement is faster and less stressful than a process running through two sets of representatives.

The information asymmetry

The insurer knows what similar injuries typically settle for. The claimant usually does not, and has no reference point for whether an offer is reasonable.

The claimant also has no way of knowing whether all heads of loss have been included, such as future treatment, lost earnings, care provided by family or travel costs.

An offer made before recovery is complete cannot account for a condition that turns out to be lasting, and settlement is generally final.

Recorded statements early in the process

Direct contact often includes a request for a recorded account of the accident and the injuries. That account can later be used on both liability and quantum.

Statements given days after an accident, while shaken and before the full extent of injury is known, tend to understate both.

There is usually no obligation to give such a statement to another party's insurer, which is different from the duty to cooperate with your own.

How regulation has responded

Several jurisdictions have introduced conduct rules requiring insurers to tell unrepresented claimants they may take independent advice, and restricting offers before medical evidence.

Some prohibit settlement of injury claims without a medical report altogether, precisely because early settlement was systematically undervaluing claims.

These rules differ substantially between markets and continue to change, so what is permitted in one jurisdiction may not be in another.

The practical position for a claimant

Nothing prevents dealing directly with the other insurer, and for straightforward vehicle damage it is often the quickest route.

Injury is the part that warrants caution, because the value depends on a prognosis that does not exist yet and the settlement cannot be reopened.

Conduct rules, costs regimes and settlement restrictions vary by jurisdiction and change over time. Independent advice, where available, is what closes the information gap.