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The Actuary The magazine of the Institute & Faculty of Actuaries

Profession welcomes call for clarity over motor insurance claims referral fees

The Actuarial Profession has responded to the publication of the House of Commons Transport Committee’s report ‘The cost of motor insurance’ by welcoming its call for transparency in referral fees in relation to personal injury claims.

The Profession’s working party on third party motor insurance warned, last year, that the number of motor insurance claims involving personal injury was increasing at an alarming rate and that the rise of claims management companies appeared to be a significant factor behind this increase.

Dr David Brown, chair of the working party said: "We produced sobering figures last year and presented them to the Transport Select Committee and so it is gratifying to see that they share our concerns about the impact of claims management companies. The cost of settling personal injury claims is rising at 30% each year and this is to the detriment of policy holders who are seeing their premiums increasing as a result.

"Our research studied data supplied by companies making up 90% of the FSA regulated motor insurance market in the UK. We were able to demonstrate that claims management companies were involving lawyers before a claim is made and the referral fees these companies received were a major driver in this. When legal costs are a significant component of personal injury costs, this will be a major cause of inflation."


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>> Profession News: Bodily injury claims cost rising faster than previously thought

>> Feature: GI: It’s no accident...
George Maher and Andy Staudt take a look under the bonnet at what is causing the growth of motor insurance claims, and ask what can be done to fix the problem