People are quick to blame personal injury solicitors for the rising cost of motor insurance but did you realise that greedy insurance companies are raking in backhanders worth approximately £4.7 billion every year from claims management companies and no win, no fee lawyers.
The personal injury compensation culture is undoubtedly a major factor in the increase in insurance premiums. Unscrupulous drivers set out to personally defraud insurance companies and stage accidents so that they can make a personal injury claim. But that isn’t the whole story.
The Association of British Insurers has broken down premiums to show who get what. Personal injury claim lawyers get £10 out of every £100 paid in premiums. £30 is attributed to uninsured drivers, whilst fraudulent claims add another £40. The legal fees associated with settling claims for personal injury come to £41 and a further £44 goes to credit hire companies which lend replacement vehicles.
Accident victims are a valuable commodity. A wide variety of firms will pay for their details in the hope of making money from them. If an insurance company’s client has an accident which was not their fault, the insurer can sell the victims details for an average £750 referral fee.
One lawyer said this was a conservative estimate and the firm he works for often pays fees in excess of £1,000 to get business.
Lord Jackson recommended that referral fees were banned in his report last year but the government has passed that buck on to the Legal Services Board which recommended that, rather than banning the fees, they were made more transparent.
It sounds very much as if motorists are set to suffer ever increasing insurance premiums for some time to come.