Banning referral fees for personal injury claims in the UK – who is to blame for increased car insurance premiums?

According to the Association of British Insurers, motorists who have been in a road traffic accident are the main cause of increased car insurance premiums.


Unfortunately for hurt and injured people, insurance companies are winning the public debate on the so-called compensation culture and last week’s decision by the government to ban the payment of referral fees in exchange for the contact details of road traffic accident victims would appear to vindicate their position that UK motorists are driving up costs by making up spurious accident compensation claims with intent to defraud the system…


Are we really to believe that the majority of road traffic accident claims are fraudulent?


However, let’s assume for argument’s sake that motorists the length and breadth of the UK are indeed staging accidents for the purpose of making a claim. If it is true that fraudulent claims are costing the insurance industry millions and these costs are being passed on to other motorists we have to wonder why these claims are being settled at all.


If the insurance companies know for a fact that the claims are fraudulent why on earth are these people not being prosecuted?


Either the insurance companies are happy to pay out on fraudulent claims, lazily pass the costs on to other policy holders and not pursue the fraudsters through the courts, or they have no evidence to back up their core assertion that personal injury claims are the cause of increased premiums. THEY CAN’T HAVE IT BOTH WAYS.


We all know how difficult it can be to make a legitimate claim on our own household insurance policy for a genuine accident at home and we all know from personal experience or from talking to family and friends the lengths that insurance companies will go to avoid paying out.


Are we really to believe that insurance companies apply a less rigorous test when assessing the merits of a (potentially) costly personal injury claim and deciding whether or not to admit liability?


Can it be that insurance companies just don’t like paying out on insurance policies?


When making a claim for personal injury following a road traffic accident the injured person has to prove that their injuries were caused by someone else. Without proof there is no claim, period.


At Bonnar & Company we very quickly root out any potential accident compensation claims that are likely to fail from lack of evidence. However, injured people can sometimes find it hard to understand that we cannot help them with their claim if we cannot prove that someone else was at fault.


It is even harder to take when injuries are very serious and the accident victim has clearly suffered but the fact remains – solicitors need to prove their cases. Otherwise anyone could claim for an injury and the insurance company would just pay up, no questions asked…Wait a minute. Is this not the line we are being fed by the insurance industry?


So what is the insurance industry talking about? Simples! The answer is profit, plain and simple. The insurance industry would prefer that nobody made a claim for personal injury and that is why their propaganda machine has moved into overdrive recently to stigmatise hurt and injured people who are already worried about making a claim.


Make no mistake we want a healthy and vigorous insurance industry with the financial strength to provide us all with cover but we want a fair insurance industry that will compensate genuine accident victims with as little fuss and bluster as possible.


What is an accident victim expected to do? Are we just supposed to grin and bear it when some careless driver runs into us, causing us pain and suffering and forcing us to take time off work…if we’re lucky?


What if we’re not lucky? What if we can’t work again? What if we can’t walk again? What if the outcome is even worse for us and by association for our families?


Against this backdrop of pain, suffering and loss of earnings the insurance industry has worked tirelessly to paint innocent accident victims as the villains of the piece and make them think twice about taking independent legal advice.


Let’s be clear on one thing. A successful personal injury claim is not the same thing as a lottery win. In order to be awarded compensation the successful claimant must have been injured and in order to be awarded a very large sum of money the claimant must have been very seriously injured. Of course not only must the claimant have been injured they have to prove that their injuries were caused by someone else’s negligence.


Personal injury compensation is not a guessing game in which claimants and lawyers think of a number and try their luck. Awards are carefully calculated based on pain, suffering and loss of earnings. Despite rumours to the contrary you will not receive a small fortune for a minor injury. It just does not happen.


Please also bear in mind that the insurance companies employ an army of solicitors who are not about to sanction a compensation claim without a forensic level of scrutiny. This, incidentally, is the main reason why accident victims need to take independent legal advice.  


Assuming an accident victim is determined enough to make a claim for compensation, then the insurance company tries really hard to persuade that person to accept its first and inevitably low offer ‘in full and final settlement’. Insurance companies know the same day and often within the hour, if one of their policy holders has caused an accident and they rush to deal with the claim ASAP often before the injured party has had an opportunity to visit their GP far less consult an independent solicitor.


This practice, which is called ‘third party capture’ is endemic throughout the UK and was the subject of a Radio 4 investigation in 2010. Is it fair for multi-national insurance companies to put injured people under intense pressure to settle their claim in the immediate aftermath of their accident? Is this justice? You may well ask why insurance companies rush to settle claims before a personal injury solicitor gets involved.


Insurance companies would say that it keeps costs down by short-circuiting the legal process. We would say what about the rights of the hurt and injured to be examined by expert medical professionals and have their claim properly evaluated?    


If you are thinking that all personal injury solicitors are ‘ambulance chasers’ you should think about the propaganda that underpins the insurance companies’ position and the fact that it is in their interest to stigmatise both accident victims and their solicitors.


But what of the real stigma that rightly attaches to the insurance industry, its PR operation and its legal advisors?    


You may wonder who has been receiving referral fees for passing on details of accident victims.


One guess?


Correct! The insurance industry itself has been pocketing millions over the years and is now portraying its behaviour as ‘squeaky clean’. Admiral Insurance has admitted to earning over £6million per annum from road traffic accident referral fees and one has to wonder what the grand total is across the industry. Our conservative estimate is that the minimum total value of road traffic accident referral fees raked in by the insurance industry is £100 million per annum given the number of insurance companies in the UK and taking Admiral’s ‘take’ as a benchmark.


We have not, do not and never will pay an insurance company any money for an accident victim’s personal details. We find the whole idea repulsive as do many of our colleagues in the legal profession.


Can we look forward to a reduction in car insurance premiums? Don’t hold your breath but remember the quoted figure of £150 as the average annual saving UK motorists can expect as a result of ‘striking a blow’ against fraudulent compensation claims from car accident victims and their ‘ambulance chasing’ legal advisors.


Personally speaking, my blood is boiling at the antics of the insurance industry as it manufactures its own spurious evidence and attempts to stigmatise and disadvantage hurt and injured people at a vulnerable time in their lives.


Perhaps, if I look hard enough, I could find a firm of solicitors with no moral compass and no business sense who would be willing to waste their time, money and resources to help me prepare a spurious compensation claim against the insurance industry for ‘aggravated high blood pressure and associated psychological trauma’…or would that be too ridiculous?   


Answers on a postcard to the Association of British Insurers.