referral fees


RogerSnook MOTOR CLAIMS CONSULTANT


Referrals - will anything change?


Roger Snook revisits the referral fees debate now that MP Jack Straw has presented his Motor Insurance Regulation Bill


W


hen I last wrote about referral fees (Insurance People,


February 2011) I confess I rather anticipated that - having received its airing - the subject would be quietly shoved under the carpet and it would be business as usual. However, fortune has smiled on the godly for a change, and whilst I


would love to take credit for the interest that has arisen, it’s clear that many have been disgusted by the unethical nature of the business of acquiring and selling claimants. But before we celebrate the potential of the Motor Insurance Regulation Bill, let’s not overlook the criticism that insurers themselves


Referral fees - it’s proposed that it be a criminal offence to solicit, offer or pay referral fees in relation to any bodily injury claim arising from a road traffic accident. This provision is supported by the government, being one of Lord Jackson’s recommendations.


On the face of it, this should put a stop to this unpleasant practice, but it’s rather curious that the proposal to ban referral fees relates only to road accident claims. Surely this is nothing to do with trade unions having a vested interest in referral fees relating to EL claims?


That cynical thought apart, it’s bound to be suggested that logically this provision should apply to ALL claims of whatever nature, at which point one wonders what will happen to the present cross party support?


It’s also noteworthy that in Mr Straw’s presentation speech there was a reference to the Information Commissioner informing the Justice Committee that data protection and telecommunications laws were regularly broken by the claims industry.


Even so, one has to recall some unpleasant truths about referral fees, not only in respect of the extent to which they add to insurers’ incomes, but also where they benefit what are loosely government organisations, such as the NHS and the police. (According to Mr Straw, “70 NHS acute trusts have received £2m in this way” - presumably each).


Income currently stemming from referral fees will have to be replaced, and in these straitened times that may not be easy. There is some justice in the view that removing referral fees alone will not necessarily have a substantial effect on premiums.


16 insurancepeople NOVEMBER 2011


have taken in the referral fee saga - which frankly doesn’t assist them in making the best of the opportunity.


The Bill’s proposals The proposed bill is not


restricted to the iniquitous trading of claimants, but seeks to remedy some of the larger problems impacting on motor insurance claims.


Whiplash - Mr Straw has realised that many whiplash claims are nothing of the sort and proposes they must be supported by “objective evidence of real injury”. (I concluded years ago that they were probably PL claims in that they appeared to occur when the claimant was sitting in a chair in his solicitor’s office. However, many claimants do not even reach the office these days as they “prefer” solicitors at the other end of the country, so perhaps they are household claims?). This may be a brave attempt to engineer a situation where no minor collision can produce a whiplash claim, but one can foresee many difficulties. After all, are not whiplash claims already supported by “objective” evidence?


Mr Straw may mean that there should be objective evidence of injury at the scene of the accident, but genuine whiplash claims often only present themselves during the 24 hours after. Further, what is so special about whiplash? Its attraction is that the pain is not always supported by clear clinical evidence in the way that a broken leg would be. Hence the


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