The chief operations officer of one of the largest car insurance companies in the UK recently said out loud what we’ve all been thinking: the insurance industry has gone ‘mad’ and needs to be changed.
Car insurance rates are going up as a result of repair garages and car hire firms buying personal details off insurers, the Office of Fair Trading recently said, and industry leaders such as Admiral COO David Stevens, have begun to fall in behind the OFT in referring to the current state of the insurance industry as ‘dysfunctional.’
The second largest insurer operating in the UK, Admiral moved to Cardiff nearly two decades ago, a decision that led Mr Stevens to call the city a ‘brilliant’ location for businesses. However, the decision to take referral fees was just the opposite, as referral fees only amount to an income equivalent to £5 per policy holder annually, yet Admiral is paying out much, much more than that in the cost of paying inflated car hire fees, leading Mr Stevens to welcome the OFT’s decision to focus on changing car hire referral fees.
Considering the huge disparity between what Admiral pays out in claims compared to what they take in from charging referral fees, the chief operating officer says Admiral would be quite happy to see referral fees become a thing of the past. It would be an unmitigated win for the insurer, said Mr Stevens, if the OFT can sort out the madness of individuals also being able to claim unsustainably high amounts of compensation as well.