In a move that’s sure to put some pressure on other car insurance companies to follow suit, one French-owned insurer recently announced it will cease accepting referral fees for motor car insurance claims.
Insurance company Axa has 1.5 million car insurance customers throughout the UK. While it has never sold the personal details of its customers to personal injury lawyers or accident management firms, the insurer has announced it will no longer be accepting fees when it refers clients with valid accident claims in touch with these legal experts.
The new decision will not result in discount car insurance, however. The UK chief executive of the company has claimed that the decision will lead to the loss of millions of pounds in revenue annually, but he was unwavering in regards to the stance of Axa, stating that the insurance industry needs some tidying up quite badly.
Calling the market ‘dysfunctional,’ the chief executive also said that the referral fee practice simply must be stopped and not allowed to continue. The decision by the company to refuse to take referral fee payments allows it to take a moral lead in the wake of an investigation conducted by Jack Straw, former Justice Secretary, which ordered a timely end to the practice.
Axa hopes to exert some pressure on some of the other car insurance companies that operate in the UK to follow their lead. However, several of Axa’s rivals such as RBS, Aviva, and RSA, have paid repeated lip service to a blanket ban but have chosen not to act in a unilateral manner.
The Government has counseled against an outright ban to referral fees, however, as officials have argued that there can be some benefit reaped from them in certain cases.