MPs call for insurers to disclose referral fee arrangements

MPs have urged the government to force insurers to disclose the firms they pay referral fees to unless they volunteer the information.

The House of Commons transport select committee, in its report on the cost of motor insurance fraud, stops short of recommending the implementation of the government’s Jackson review inspired plans to ban referral fees.

Instead, it urges the industry to be more transparent about its referral fee arrangements.

The report calls on insurers to “publish on their websites a list of the firms with which they have referral arrangements, an indication of the level of the fees paid, and a clear explanation of how referral arrangements work and their purpose.”

It says this information should be sent to policy holders with their insurance documents. “When claims are made, insurers should make it clear to claimants that they need not use the solicitor, vehicle repairer or credit hire firm which is recommended by the insurer.”

And the committee urges the government to step in and legislate if insurers fail to introduce a more transparent regime within the next 12 months.

Committee chair Louise Ellman said: "Consumers are largely unaware of how much money moves around the insurance industry in this way when they make a claim. They deserve to see where their money is going. If insurance companies cannot agree a method by which to improve transparency around referral fees, then the Government should step in, with legislation if necessary. "

The report also urges the industry to fund the establishment of a new dedicated unit to tackle fraud.

It says: “We call on the main players in the insurance industry to do more to tackle fraud, including by funding a dedicated police unit on insurance fraud, and we expect the Government to help in achieving this.”

More broadly, the committee recommends that the Department for Transport should host a conference on motor fraud and convene an industry working group to assess how this technology can be most effectively used to tackle the issue.

The report also recommends the government to

*specify a date for then introduction of new data sharing arrangements between the DVLA and insurers

*mount a publicity campaign to promote the continuous insurance enforcement, which makes it an offence to keep an uninsured motor vehicle

*carry out a review next year of the penalties for driving without insurance

*publish plans to increasing the rigour of the driving test within the next six months with a view to implementing changes during the current Parliament