AXA bans referral fees

AXA has responded to the current furore surrounding referral fees by introducing a ban on accepting payments from personal injury lawyers.

At the same time the insurer has also called for reforms to whiplash injury claims in a bid to eliminate fraud within the industry.

The move comes a day after former justice secretary Jack Straw called referral fees “a racket.” The Information Commission also todaty confirmed that it has launched an investigation into Straw’s claims that motor insurers who sell clients’ details to personal injury lawyers are breaking the law.

In a statement, AXA said it has “never sold customer details to personal injury lawyers or accident management companies, and with immediate effect will no longer accept fees from personal injury lawyers when we put our customers in contact with them to pursue valid claims notified at the time of an accident.”

AXA UK group chief executive Paul Evans said: “We have decided that the only way to address the problem adequately is to lead by example. Over the last few years we have seen an exponential rise in personal injury claims – especially soft tissue injuries – whilst evidence suggests road accidents are decreasing. We have also seen a significant rise in claims made some years after the event which are therefore impossible to prove or to defend.

“It is unfair and unsustainable that drivers are being disadvantaged by exaggerated injury claims which drive up the cost of insurance. Referral fees have only served to promote an even greater number of injury claims and AXA will stop this practice whilst Government implements the necessary legislation to restore order. I believe this move will be a positive first step in making the system more equitable and, ultimately, benefit customers through more affordable motor premiums”.

AXA estimates that around half of the recent increases in motor insurance premiums is related to the rise in bodily injury claims.

AXA said it hopes this action is a first step to reforming the emerging compensation culture which it says is “spiralling out of control” and encouraged the Government to ban referral fees completely.

“What is ultimately needed, however, is a fundamental evaluation of whiplash and other minor trauma claims to eliminate fraud and bring some sense back to the cost of these claims,” the insurer said.

“Other countries have banned whiplash claims either totally or below a certain speed threshold and, while our industry needs to properly compensate those who have suffered injury, we call on the Government to bring about changes that will have the effect of limiting this exponential rise in spurious claims.”