Referral fees in personal injury claims are to be banned by the Government, the BBC has reported.
The fees have been blamed for encouraging a compensation culture and for sharp rises in motor insurance premiums alongside an explosion of law firms offering no-win-no-fee services and pestering potential claimants with unsolicited approaches.
According to the Association of British Insurers, the number of personal injury claims received by insurers leapt 72% between 2002 and 2010, leaving consumers paying £2.7 million a day to claimant lawyers through their motor insurance premiums.
Commenting on the ban, Justice Minister, Jonathan Djanogly, told the BBC: “Many of the claims are spurious and only happen because the current system allows too many people to profit from minor accidents and incidents.”
However, insurers will be losing out on their income from passing details to personal injury lawyers and the like, and Admiral may be one company that particularly feels the pain.
In July, The Sunday Telegraph reported that the Cardiff-based group depends on ancillary sales for a high proportion of its UK car insurance profit, with acceptance fees making up the bulk of such sales.
News of the ban comes a day after the Office of Fair Trading issued a call for evidence on car insurance premiums, following reports that premiums have risen by as much as 40% in a year.
The watchdog wants to establish the background to accounts of soaring private motor insurance costs, so it can consider whether further work is needed to improve the way the market works.
As yet, there is no timescale for implementing the referral fee ban.
source : http://www.insurancedaily.co.uk
The fees have been blamed for encouraging a compensation culture and for sharp rises in motor insurance premiums alongside an explosion of law firms offering no-win-no-fee services and pestering potential claimants with unsolicited approaches.
According to the Association of British Insurers, the number of personal injury claims received by insurers leapt 72% between 2002 and 2010, leaving consumers paying £2.7 million a day to claimant lawyers through their motor insurance premiums.
Commenting on the ban, Justice Minister, Jonathan Djanogly, told the BBC: “Many of the claims are spurious and only happen because the current system allows too many people to profit from minor accidents and incidents.”
However, insurers will be losing out on their income from passing details to personal injury lawyers and the like, and Admiral may be one company that particularly feels the pain.
In July, The Sunday Telegraph reported that the Cardiff-based group depends on ancillary sales for a high proportion of its UK car insurance profit, with acceptance fees making up the bulk of such sales.
News of the ban comes a day after the Office of Fair Trading issued a call for evidence on car insurance premiums, following reports that premiums have risen by as much as 40% in a year.
The watchdog wants to establish the background to accounts of soaring private motor insurance costs, so it can consider whether further work is needed to improve the way the market works.
As yet, there is no timescale for implementing the referral fee ban.
source : http://www.insurancedaily.co.uk
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