MPs have recently criticised several car insurance companies for encouraging personal injury claims in the wake of road traffic accidents.
A recent Transport Select Committee report took firms to task for receiving payments from law firms for divulging to them which of their motor car insurance policy holders had recently been involved in accidents. The injury lawyers then use the names in an effort to drum up business by trying to persuade the injured parties to file insurance claims.
However the Association of British Insurers instead laid the blame at the feet of the so-called ‘compensation culture’ for driving the rise in both car insurance rates and legal costs. ABI spokesman, Nick Starling, took the committe to task for neglecting to realise the primary driving force behind the rate increase to even discount car insurance policies is a steady increase in the costs of legal proceedings and personal claim awards.
The ABI stated that the average motor premium in the UK increases by £40 every year due to the increase in legal costs associated with insurance lawsuits.
In response, MPs demanded a more transparent look at the nature of referral payments for accident injury claims instead of the current ‘merry-go-round’ of rising costs. The number of such claims has rocketed in recent years, outstripping the number of yearly accidents.
MPs stated that referral fees were made either by or to insurance companies and law firms, medical experts, claims management firms, credit hire firms, vehicle repair shops, and rescue truck drivers in close connection with car insurance claims.
The committee also discovered that in excess of 40 per cent of injury lawyers made payments to claims management companies or insurance firms in order to obtain leads on potential new clients.