You may have seen reports and discussions in the news this week around personal injury claims.
The process by which personal injury lawyers acquire personal customer data has recently come under the spotlight. Customer details, such as phone numbers, are often passed on to to these personal injury lawyers by car insurance providers and even by the police in return for a referral fee.
The former justice secretary, Jack Straw, has recently spoken out against these referral fees – which he describes as a ‘huge racket’. Insurance companies, he claims, can make between £200 to £1000 per referral.
He has condemned this practice by some insurance companies, branding these referral fees as the ‘industry’s dirty secret’. Recovery firms and police are also accused of making money through referrals. It has been reported that West Midland police made £622,275 in one year from referral fees.
The increasing ‘no win, no fee’ culture has apparently led to a huge increase in personal injury claims and, in turn, a hike in car insurance premiums. Justice minister, Jonathan Djanogly, said that the current system gave people a ‘perverse incentive’ to make unjustified claims. Conveniently, around 80 per cent of all claims are for ‘whiplash’ which cannot be detected by scans or X-rays.
In the past 10 years, the cost of personal injury claims has doubled from £7 billion to £14 billion and vehicle cover premiums have risen by more than 30% in the last year alone. There’s been a sharp hike in costs despite the fact that the number of road traffic accidents involving personal injury has actually fallen.
Jack Straw has also hit out against the aggressive tactics used by personal injury firms – such as harassing calls and a barrage of text messages. The government has vowed to address this referral system, stating that it is a priority issue for them.
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