Actuarial Profession welcomes call for transparency in referral fees in motor insurance claims

The Profession’s working party on third party motor insurance warned, last year, that the number of motor insurance claims involving personal injury was increasing at an alarming rate and that the rise of claims management companies appeared to be a significant factor behind this increase.

Dr David Brown, chair of the working party said: “We produced sobering figures last year and presented them to the Transport Select Committee and so it is gratifying to see that they share our concerns about the impact of claims management companies. The cost of settling personal injury claims is rising at 30% each year and this is to the detriment of policy holders who are seeing their premiums increasing as a result.

“Our research studied data supplied by companies making up 90% of the FSA regulated motor insurance market in the UK.  We were able to demonstrate that claims management companies were involving lawyers before a claim is made and the referral fees these companies received were a major driver in this. When legal costs are a significant component of personal injury costs, this will be a major cause of inflation.”

Ends

Enquiries: Tel. Michael Scanlan on +44 (0)20 7632 1453 / +44 (0)7798 804 871 or email michael.scanlan@actuaries.org.uk
 
Notes to Editors:

1. Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.
2. The Profession is governed by the Institute and Faculty of Actuaries. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of the Profession in society.
3. Members of the Institute and Faculty of Actuaries have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.
4. The Profession is available to provide expert comment to the media on a range of actuarial- related issues, including enterprise risk management, finance and investment, general insurance, health and care, life assurance, mortality, and pensions.

 Follow us on Twitter @actuarynews