This past June, Axa Insurance became the sole voice in a sea of car insurance companies that was willing to cease selling customer details to lawyers interested in paying for the names of those who had made car insurance claims. This ‘referral fee’ system, described as a ‘racket’ by Labour MP Jack Straw, should be discouraged by the government, urged Axa.
The insurer also said that the government should take steps to reduce the fees ‘that ‘no win no fee’ injury lawyers can charge their clients. Axa UK chief executive, Paul Evans, said that he welcomed signals that the government is open to imposing market-wide bans upon the practice – yet he feels that these referral fees are not a cause but just a symptom of the rising number of personal injury claims.
More radical steps are needed, said Mr Evans. His first suggestion was to review the fixed fees that personal injury lawyers earn.
Believe it or not, the new computerised Ministry of Justice system was actually part of the problem. The system, which processes low-value car accident claims which involve low-value, allows lawyers to charge a fixed fee of £1,200 to the other side just for the pursual of a claim.
Meanwhile, the lawyers that are utilising the system might have already shelled out £800 in referral fees to that very insurer for the details of each client.
Mr Evans said that charges should be fixed at £400 at the most.