In the wake of massive increases to their car insurance rates, many motorists in the UK have begun to pursue alternatives such as turning to alternative transport options or reducing the amount of cover they purchase from car insurance companies.
While insurers have attributed the rising costs to many factors such as the rising number of personal injury claims both valid and fraudulent, honest motorists are feeling the squeeze especially with the cost of petrol soaring into the stratosphere due to political unrest in the Middle East.
However accusations that insurance firms – even those who provide relatively discount car insurance options to their customers – are engaging in activities that hinder rather then help. While insurers point accusatory fingers at claims management companies, many insurance firms sell personal details of their own clients to such claims management companies in the event of an accident. Sometimes insurers will even encourage their clients to go through a particular management company when making a claim.
Insurers engage in this activity because accident companies will pay a premium for such referrals. Sometimes a referral can be worth several hundred pounds to a claims company, and research indicates that approximately 40 per cent of these firms will pay whatever referral fee they are charged in order to be given the personal details of accident victims directly from insurers.
One anonymous source stated that motorists are sometimes even informed by their own insurers to make a claim with a preferred management company or legal office because the insurer will then receive the referral fee from the law firm.
For the most part, customers are ignorant of how much money circulates through the insurance industry in this manner in the event that they make a claim, the official said. Remarking that policyholders have a right to know where their money is being spent, the official continued on to say that insurers need to come to an agreement in regards to instituting measures that will improve the transparency of referral fees.