Posted on March - 14 - 2011
Could the police bring car insurance costs tumbling?
A newly proposed initiative could see the police tackling the injury lawyers and accident management firms that are currently driving up the cost of car insurance. But will the UK’s compensation culture prove to be too well established to defeat?
Car insurance prices are higher now than ever before and the increase is showing few signs of abating. Statistics suggest that premiums could rise by as much as 40 per cent over the course of 2011, with moneysupermarket car insurance experts warning that every day you wait to renew your car insurance, your premium goes up in price by 44 pence.
But a new report by the Transport Select Committee has cast a light on the issues at the root of spiraling insurance costs and the finger of blame has been well and truly pointed in the direction of personal injury lawyers and accident management companies.
The report focused on the ‘referral fees’ being paid by injury lawyers and accident management companies to garages and insurers in exchange for the personal details of people involved in car accidents. These fees, according to the report, are fuelling an ongoing increase in the number of personal injury claims, which often result in large compensation payouts from insurers.
Transport Committee Chairman Louise Ellman said: “Wider access to justice is to be welcomed, but it has come at a significant cost, with far more personal injury claims being made than in the past.
“The police made plain to the committee that ‘staged accidents’ are on the increase and that, so far, we have been lucky there have been no fatalities resulting from such incidents. That luck may run out unless the insurance industry acts rapidly to help the police target this kind of insurance fraud.”
The committee called upon insurers to work together with a dedicated police unit to tackle fraudulent injury claims.
Ms Ellman added: “Consumers are largely unaware of how much money moves around the insurance industry in this way when they make a claim. They deserve to see where their money is going. If insurance companies cannot agree a method by which to improve transparency around referral fees, then the government should step in, with legislation if necessary. ”
Simon Douglas, director of AA Insurance, welcomed the proposals for a dedicated unit to tackle the issue.
He told the BBC: “With insurer control, such a unit could very quickly pay for itself. Fraud, particularly false personal injury claims, is in my view the biggest driver of premium increases.”
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