Cross party transport committee threatens legislation over accident referral fees

Car insurers and accident management firms need to clean up their act to cut down the merry-go-round of commissions and referral fees paid out after an accident, warns an influential cross party transport committee at Westminster.

MPs are concerned that motorists are largely unaware their details are ‘sold’ by insurance and law firms, rescue truck drivers, vehicle repairers, credit hire firms, claims or accident management companies and medical experts in connection with motor insurance claims.

They say the industry needs to reform this fee frenzy – or face regulation by Parliament.

“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” said Louise Ellman, who chaired the committee.

“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.”

Concerns over cash-for-crash fraud

She was launching a report: ‘The cost of motor insurance’ (Fourth Report of Session 2010-11).

The committee also raised concerns about how fraud is pushing up the cost of car insurance.

The MPs are urging the industry to fund a dedicated police unit to tackle the problem.

“Wider access to justice is to be welcomed, but it has come at a significant cost, with far more personal injury claims being made than in the past,” said Ellman.

“The police made plain to the committee that ‘staged accidents’ are on the increase and that, so far, we have been lucky there have been no fatalities resulting from such incidents. That luck may run out unless the insurance industry acts rapidly to help the police target this kind of insurance fraud.”

Lastly, The Insurance Blogger can reveal that the committee is calling for action to reduce the rate of casualties among young drivers by making the driving test more ‘rigourous’.

“If we are to curb the casualty rate, especially amongst young drivers, then it’s essential that the driving test properly prepares drivers for motoring,” said Ellman.

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