When I heard how the Government is to ban referral fees in personal injury claims I had mixed reactions.
It’s a step in the right direction but how effective will it be in curbing sky-rocketing car insurance premiums?
Last year I wrote that it was a scandal that the insurance industry should be allowed to clobber drivers with premium increases which they then try and blame on everyone else, perpetuating the myth of the “compensation culture” as a smokescreen for their own greed.
Law firms have been unfairly blamed for fighting for compensation for clients when insurance companies are guilty of selling details of those very claims.
The insurance industry has been silent about the scandal of insurers selling to solicitors the claims which they so publicly decry.
I can see the insurer’s interest in selling cases to lawyers while at the same time trying to discourage victims from claiming.
It means the insurers get paid for the cases they sell, without having to face paying out on so many claims against them.
But where is the public’s interest?
Now the Government is to ban insurance referral fees, but I’m not convinced it has a grasp of the issues.
Can a ban be effectively enforced and do the authorities have a definition of what is a referral fee?
For example, what if an insurer refers cases to a solicitor in bulk but in return demands the solicitor charges a reduced rate or does other work for the insurer at no cost?
The effect is the same as a referral fee in the sense that the insurer gets something for sending the case to their favoured solicitor but is that in the claimant’s best interest and how is the Government going to prevent it?
And in a new attack, the insurance industry now argues that a solicitor’s costs should be fixed at a few hundred pounds because by the time the solicitor has paid an insurer say £800 for a referral that’s all they are left with at the moment.
But that would leave no budget for marketing our services.
Law firms must be allowed and financially enabled to market our services because people need to know their rights and helped to claim compensation if they have been injured in an accident.