Should we ban employee referral payments?

Does anybody actually listen to what the British government says? Some claims management companies obviously don’t!

The government recently promised to clamp down on fraudulent claims for whiplash and yet at least one claims management company has continued to advise callers to file bogus personal injury claims.

A reporter, posing as an accident victim, contacted the company and was told he might as well file a claim despite his admission that he had not suffered any pain as a result of the incident. He was also told he could expect to get personal injury compensation of between £2,000 and £3,500.

The insurance industry pays out £2 billion every year on bogus claims and motorists have seen their annual insurance increase by £90 to compensate. Between 2005 and 2010, claims for whiplash increased by 70%, whilst RTAs decreased by 23%.

The claims management company in question here is called Legend Claims. It makes some of its money by referring accident victims to no win no fee personal injury solicitors.

The reporter contacted another five claims management companies and spun them a similar yarn. They all refused to deal with his claim outright.

When asked about his company’s underhand dealings, Shafiq Ahmed, the owner of Legend Claims, said three employees had now been sacked for submitting false whiplash claims, including the one who advised the reporter. She admitted that she had acted incorrectly and did not have the authority to handle such cases. She only did it in the hope of getting a referral fee!

If claims management companies did not pay their employees referral fees, they would be a lot less inclined to encourage fraudulent claimants. Could this be the simple solution to what has become a very expensive problem?

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