The government is set to ban referral fees in a bid to reduce the number of personal injury claims in the UK.
Under the current system, insurance companies have been selling the details of customers involved in accidents to lawyers specialising in personal injury.
It seems that after making huge profits from this the insurance companies now want to ban referral fees too and The Association of British Insurers said the ban must be “watertight”.
Mr Djanogly said “Many of the claims are spurious and only happen because the current system allows too many people to profit from minor accidents and incidents.” He also went on to say that the ban would make claimants think harder about whether to sue, and give insurers an incentive to pass the savings on to customers.”
However how are stopping referral fees going to make claimants think harder about whether to sue when most of the public were not even aware of referral fees before Jack Straw brought it to their attention?
In fact stopping referral fees will have no affect whatsoever on the publics desire to claim if involved in an accident. This seems to be a stepping stone for both the government and the insurance companies to try and implement a ban on “No Win No Fee” claims. This is something we have to be very careful about, it could easily mean “No Money No Justice” as it would prevent the poor from taking valid claims to court due to solicitor’s high rates.
The Office of Fair Trading has said it will put motor insurance under the spotlight after drivers had seen premiums rise by 40% on average in a year.
In fact in 2009, the number of road accidents involving personal injury was 31% down on the average for 1994-98 yet the insurance companies are still blaming personal injury claims for the rise in our insurance costs. Maybe we should be looking at the insurance companies desire to fill their pockets as the real reason for our high premiums.
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