28 August 2014

www.e-solutions.uk.com

Angus Stewart - www.e-solutions.uk.com

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POSSIBLY ILLEGAL, CERTAINLY IMMORAL

29 June 2011  |  3303 views  |  0

Possibly illegal, certainly immoral – Do insurance companies need to look again at their role in escalating premiums?

The recent revelations by former Justice Secretary Jack Straw that he has been advised by senior executives within the car insurance industry that they receive “referral fees” from no win no fee personal accident legal firms is, in my opinion, a complete scandal.

We have all suffered with rapidly increasing car insurance prices over recent years (up to 30% in the last year alone) - and much of the increase has been blamed on the rapid increase in personal injury claims. It now transpires that insurance companies amongst others are selling the personal data on their customers to these legal firms - even if no personal injuries have been sustained in the accident.

The legal firm then contacts the driver and tells them they can claim for whiplash, which is difficult for doctors to categorically diagnose.  Even when the driver has said they have not been injured they are being persuaded to claim (fraudulently) by the legal firm and tempted with payouts in the order of £3,500.

Insurance is supposed to be a contract of ultimate good faith and indeed an insurance company can fail to pay out if it has been misled by a policyholder – and here we have insurance companies providing personal details of policyholders to third parties, very probably in breach of the Data Protection Act, and effectively encouraging a fraudulent claim.

A spokesman for the Association of British Insurers agreed that the payment of referral fees should be banned but said that until it was then if insurers didn’t provide this information then other parties would do so. So I suppose that makes it alright then!

The innocent party in all this is of course you and I. Our insurance premiums increase year on year as a direct result. One figure I heard quoted is that only 24% of the costs of a claim goes on repairing a vehicle – that leaves an awful lot going into someone else’s pocket!

I hear that some insurance companies refuse to work in this underhand manner and in my view they should be applauded. I trust that they use this in their advertising and win a lot of new business. I would prefer to deal with an “honest” insurance company, just as they would prefer, I hope, to deal with an honest customer. In the meantime the remainder should put their house in order quickly and I trust they will receive substantial fines for their malpractice.

Angus Stewart - CEO - e-Solutions & Services UK Ltd

TagsSecurityRisk & regulation

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name

Angus Stewart

job title

CEO

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www.e-solutions.uk.com

member since

2010

location

Needwood

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Prior to establishing e-Solutions as one of the UK's leading providers of fraud management, risk ...

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