According to motor car insurance company Admiral’s head, if the Government presses forward with their plans to ban referral fees, motorists could face even higher car insurance rates than they do right now.
Admiral, which experienced a seven per cent drop in share value after the plans were announced, has lost more than £260 million in value since the announcement from Justice Secretary Ken Clarke. Mr Clarke said that referral fees, which saw personal injury firms paying insurers for the details of insurance policyholders who have gotten into accidents, will soon be a thing of the past.
The practice has been blamed for the death of discount car insurance quotes, as premium prices have increased by 40 per cent in the past 12 months to a cost of nearly £1,000 for an average comprehensive policy. Price increases have also been blamed on uninsured motorists, which can raise the price of the average insurance policy by £30 a year to manage the added costs.
Henry Englehardt, chief executive of Admiral, stated before the announced ban that the Government would do better to set injury compensation caps for both claimants and their insurers. Whiplash in particular is in need of a cap, said Mr Englehardt, with victims currently eligible for as much as £2,000; the chief executive recommended a £750 cap to claimant awards, with a further reduced cap of £150 to legal sources.
However, the insurer said that the ban would not interfere with its plans for a massive expansion which would lead to nearly 3,000 jobs being created in Wales. Admiral does more than just selling customer data, a spokesman said, adding that they put their customers through to legal representatives if they require assistance.