Money grabbing referral firms driving up insurance costs

The truth is beginning to unravel about how money grabbing firms trade in the misfortune of drivers and pedestrians involved in road crashes and drive up the costs of car insurance.

Selling information is a billion pound business, according to Labour MP Jack Straw, who is stacking up a lot of credit as the spearhead of a campaign to put the brakes on insurance companies making cash from referral fees.

Even the police are being dragged in to the row as some officers are accused of tipping recovery services about crashes so they can tow cars to recovery areas and charge their insurers.

Police forces are allegedly charging £25 a call and making up to 31.3 million a year in commissions.

The Association of Chief Police Officers denies wrongdoing – but it’s easy to see that once a driver’s details are released to a recovery firm, no rules are in place to stop that information from being sold on to claims management firms.

A check of tow firms against data protection data held by the Information Commissioner shows few  are registered for handling personal details – which is a probable law breach.

Axa, the insurance giant, has also gained credit by making public that their firm is banning referral fees.

The firm is concerned by the ‘unscrupulous practice’ of motorists being encouraged to make claims against car insurance several years after an accident.

Group chief executive Paul Evans said: “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.”

Despite the uproar over car insurance referral fees, the government refuses to ban them – and recently the Legal Service Board has recommended they should be more transparent but not scrapped.

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