Photo: The Telegraph
Is it now any port in a storm for under-pressure insurer Admiral?
Saturday’s Telegraph reported that Admiral, the FTSE 100 motor insurer, is considering branching into the legal sector as it “faces up to the loss of the lucrative referral fees that generate millions of pounds in profits each year.”
According to industry insiders, Admiral must move quickly to replace the loss of income from the fees paid to insurers for information of potential personal injury claimants.
The Cardiff-based group is exploring plans either to set up its own personal injury law firm where it could potentially direct customers with claims or become a majority backer in one, following the implementation of the Legal Services Act in October this year., when the implementation of “Tesco law” widened the provision of legal services to new investors including retailers, banks, insurers and outsourcing companies – The Four Horsemen of the Apocalypse as far as independent legal advice in the UK is concerned.
However, as the story of Britain’s over-hyped, and mythical so-called compensation culture rumbles on, insurance companies are becoming increasingly uncomfortable when quizzed about their involvement in various referral fee schemes…and Admiral seems to be no different. We wonder why.
Despite periodic denials that it sells client information, according to official Admiral sources, about 5.6% of its overall profits come from these fees. So who are we to believe when Admiral contradicts its own statements?
Speaking after the referral fee ban was announced in September, the company said: “Admiral does not sell customer data; if one of our policyholders has a non-fault accident, suffers a bodily injury and they require assistance, we will put them in touch with a personal injury lawyer.” So what about the income from referral fees then?
Admiral would not be the first insurer to push into the legal industry. Axa owns Knight Legal Services, a defendant law firm. It has always denied it refers its customers to Knight Legal Services and says it has no plans to start doing so…but what will happen if insuers own law firms?
How can injured people be confident that their accident compensation claims will be handled fairly and with their best interests at heart? It might be tricky to find independent legal advice when the representatives of those causing injury are also investors in law firms that pursue claimants’ rights, or even worse perhaps, set up theit own personal injury law firms…
It would appear that Admiral’s plans are at an early stage and are one of several being considered. However, the news is likely to raise eyebrows across the City with Admiral’s shares having fallen heavily in recent months. A case of who’s next?
So me hearties, let’s observe this “rum do” as they set sail on a steady course for berating personal injury lawyers, stigmatising their clients, perpetuating the myth of a compensation culture and,
oh yes, …becoming personal injury lawyers themselves??
Can all this be about profit and an attempt to make a flawed business model work? Well, it’s not quite “Neverland”, but you can see it on the horizon, allegedly…