Straw brands referral fees as "bribes"

Jack Straw has branded referral fees as bordering on “bribery”.

Giving evidence at a special session of the House of Commons’ transport select committee inquiry into motor insurance, the former justice secretary said: “These people  (claims management companies) are verging on the criminal, in any other line of life you would call referral fees bribery.”

Straw, who has tabled legislation to reform motor insurance regulation,  linked the explosion in personal injury cases during the last year to the growth in the number of claims management companies.

Straw also defended his proposal to ban post code motor insurance pricing. He said that pricing o a regional basis would get around the problem of asking people from one end of the country to subsidise drivers at another.

But AXA UK chief executive Paul Evans said that Straw’s proposal would mean drivers living in relatively low risk rural areas would pay more.  

He said: “You would see higher premiums in rural areas and a significant transfer from urban areas and to people who are already disadvantaged.”