Higher Premiums as Car Insurance Firms sell Personal Details

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(Free-Press-Release.com) June 27, 2011 -- Car insurance is expensive enough, so most motorists won’t be amused to learn why they’ve been paying higher premiums – despite a fall in the number of road traffic accidents that result in personal injury.

The reason is that the cost of personal injury claims has doubled over the last decade from £7 billion to £14 billion – aided by the insurance companies themselves, who have been selling on clients’ personal details to lawyers and firms specialising in accident claims.

The referrals can earn the insurance companies between £200 and £1,000 each, but the increased number of personal injury claims are expensive – and the costs are passed on to car insurance policy holders as higher premiums.

Car insurance scandal

Worryingly, many of the payouts are for whiplash injuries, which can’t be detected by scans or X-rays – opening the door to potentially fraudulent claims. The figures certainly seem to be out of kilter when you realise the insurance industry pays out £2 billion annually for whiplash injuries while the NHS spends only £8 million treating them.

The scandal was uncovered by former Justice Secretary Jack Straw, who said on Radio 4’s Today programme that a friend had been bombarded with texts and calls from an accident claims specialist. They had been advised to claim for a whiplash injury – even though they had not suffered whiplash in the minor accident they’d been involved in.

As a result of a probe into industry practices, Mr Straw discovered that car insurance companies weren’t the only ones selling on details of people who’d been involved in accidents – even the police and hospitals have been cashing in on referral fees.

More expensive car insurance premiums

The result is more expensive premiums in areas where personal injury claims are most common – putting honest motorists at a significant disadvantage. “It is the economics of a madhouse, where the law-abiding public is penalised,” said Mr Straw.

The Association of British Insurers’ Director General Insurance and Health Nick Starling said: “We are pleased that Jack Straw has joined our call for referral fees to be banned.

“It is not right that people take cash for tipping off lawyers about accidents which fuel personal injury claims, driving up costs for all motorists.

“They must be banned as part of a whole package of civil litigation costs reform which includes looking at solicitors’ fixed fees and hourly rates.”

Moneyhighstreet comments: “When people take out a car insurance policy, they don’t expect their personal details to be sold on by their insurers – let alone sold on by the police or hospitals.

“But the sad fact is that, because referral fees are profitable, insurers are taking advantage of them before they’re snapped up by others. With a growing culture of personal injury claims – some made in highly dubious circumstances – it’s the honest motorist who ends up out of pocket by paying higher premiums. We hope that the sale of personal details becomes properly regulated and spurious claims begin to fall.”

“And with already-expensive car insurance premiums being inflated in this unnecessary way, it’s more important than ever to shop around for the best deals and check price comparison websites regularly.”

www.injuryclaimhelpline.com
article sourced from www.moneyhighstreet.com

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