Taxi Insurance premiums have increased by nearly a third in 2011 – a shocking statistic when compared with previous year’s rises. Much of this increase has been blamed on the soaring cost of personal injury claims as a result of road traffic accidents.
Current arrangements (where everyone in the chain is accused of taking a cut of the profits) have led to high costs, encouraged a compensation culture and led to the growth of an industry which pursues claimants for profit. Insurance companies inevitably pass the costs on through increased compensation claims directly onto motorists and those with other insurance policies.
Referral fees have subsidised the profits of the people involved – from lawyers to brokers, to insurance companies to police forces – there has been a lack of control on the costs and people involved. Would some of these businesses be able to survive without this supplemental income?
The current system in which personal injury details are sold on by insurance companies to lawyers is about to change as the Government is now set to ban the payment of referral fees in personal injury claims in an attempt to curb this compensation culture. Whether or not there will be exploitable loopholes and the practice carries on is anyone’s guess.