Claims management firms have taken the spotlight again. Three people working for these firms, one of them from the LV= insurance company, were arrested this week after a probe revealed they bought vehicular accident victims’ information from insurance companies, otherwise known as the “cash for crash” business.
Personal details of customers of insurance companies that have been involved in vehicular accidents were supposedly sold for nearly £17,000, making it worse for the controversy that has hounded insurance companies for a long time. Just recently, Aviva, Britain’s largest insurer was on the news with the very same issue. It has two employees that will be going to court for this very claim.
Just how profitable is this “cash for crash business” and why do claims management firms go to great lengths to go as far as bribe insurance employees for information?
Reports have come in that personal injury claims such as whiplash or repairing vehicles involved in an accident means millions of pounds of claim fees, often with rip-off rates.
While this maybe profitable for claims firms, this has a negative effect to consumers at the tail end. As more claims are being pursued and “cashed out”, vehicle insurance premiums continue to soar. Studies show that premiums have gone up to an average of £93 per policy annually.
This isn’t the only controversy claims management firms have gone through. Most of them have been fined for making nuisance text and automated phones calls. One firm has been fined £80,000 for doing nuisance calls – imagine one customer having received 407 calls from them alone!
There has been a call to further toughen up laws regarding the payment referral scheme of insurance companies to claims management firms. However, the ICO is first to admit that even if laws were implemented in 2013, the “cash for crash” trading remains lucrative.
One of the reasons why the trade continues to be thriving is the law doesn’t have much teeth to sink into guilty parties. Individuals found guilty get no more than a fine and a slap on the wrist if they are tried under the Data Protection Act. The Commissioner wants tougher penalties like including jail time.
The three employees arrested in reports were found to have contacted a person who has received injuries from a vehicular accident, subsequently receiving a pay-out that was up to 40% lower than the amount usually paid by insurance companies.
Insurance company LV= claims director Martin Milliner promises that they will be working closely with the Insurance Fraud Enforcement Department for the resolution of the case.
Customer data protection is still the priority of insurance companies, most of them claim. But the truth is, a recent Aviva study shows that claims increased by 9% in 2014, increasing pay-outs to a mind-blowing £2.5billion. And the cincher? Ninety-six percent of these claims were from third parties, exactly from those controversial claims management firms that rip-off customer victims.