Referral fee ban ‘can’t come soon enough,’ say experts

The planned governmental ban on referral fees, a practice that has been criticised for causing rampant hikes to consumers’ car insurance rates, ‘can’t come soon enough,’ according to some experts.

Car insurance companies have been routinely charging personal injury lawyers for access to personal details of drivers that have reported being in an accident.  Lawyers and claims management companies will then plague the drivers by phone and text in order to entice them with the prospects of a large personal injury compensation payout.

However, legal costs for car insurance groups increase in proportion with the number of personal injury compensation claims.  Insurers then pass on the costs to their customers through higher premium prices with no regard to whether they’ve made a recent accident claim.

Insurers themselves are responsible for the perpetuation of this vicious cycle.  There have been few willing to speak out against referral fees, as they fear doing so will give their competitors an advantage, especially with payments totaling as much as £1,000.

However, the Association of British Insurers has changed its tune.  The ABI has now called for a blanket ban, pointing the finger at referral fees for increasing legal costs, and by extension, higher insurance rates.

Industry experts say that referral fee payment system, which results to losses to consumers when viewed at any angle, needs to go.  Premium prices have increased by 40 per cent in the past 12 months, even though accident figures have been falling consistently, and motorists are routinely pestered with texts and phone calls despite not sustaining any injuries in an accident, with some people reporting being inundated with texts even though they’ve not been in involved in an accident for nearly a decade.

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