ABI calls on govt to ban referral fees

The Association of British Insurers (ABI) has warned that motor premiums will continue to soar unless serious action is taken to cut the cost of rising personal injury claims.

The warning comes as figures released today by the AA show that the average motor insurance premium has risen 40% over the last year.

ABI director of general insurance and health Nick Starling said: “Enough is enough. Putting the brake on ambulance-chasing lawyers and claims management firms cannot come a moment too soon. Motorists have rightly had enough of paying for excessive legal costs, which add an extra 10% to the cost of motor insurance. It cannot be right that for every £1 motor insurers pay out in compensation, an extra 87 pence is paid out in legal costs.

“The government’s recently announced plans to reform civil litigation will go a long way to cutting out unnecessary and disproportionate legal costs and should lead to cheaper motor insurance in the future. What we now need is a ban of referral fees - where details of potential personal injury claimants are sold on to solicitors and claims management firms.

“It is vital that the government acts to outlaw referral fees, as part of its wide-ranging reforms to civil litigation”.