Clarke probes "dirty secret"

If your car insurance is on the rise, one reason could be the "outrageous racket" of insurance firms, police, local garages and even hospitals selling details of crash victims to ambulance-chasing lawyers.

Former Justice Secretary Jack Straw exposed this "dirty secret" of the insurance industry today.

Insurance firms are said to get referral payments of £200 to £1,000 a case to pass on details to claims-management companies who encourage people to make claims.

The cost of personal injury claims, including many for whiplash which is difficult to prove or disprove, has soared from £7 billion to £14 billion in a decade. This comes as the number of accidents has fallen and cars have got safer - make your own judgement whether these claims will all have been genuine or some scams.

Insurance chiefs admit that they do take referral payments and justify this by saying if they don't, other people will, and that they are not making a profit from the practice while having to meet some of the costs of the claims.

This argument does not wash with Mr Straw who says he would have banned the referral payments when he was Justice Secretary if he had known about them.

Now his successor Ken Clarke is considering doing just that.

"We are considering the matter of referral fees alongside our proposals for radical reform of the whole "no win no fee" system announced earlier this year," said a Ministry of Justice spokesman.
 
"Those proposals are aimed at tackling the high costs of success fees and insurance premiums in no win no fee cases. We want to strike a better balance between the interests of claimants and defendants to maintain access to civil justice while ensuring costs are proportionate, sustainable and affordable."

Nicholas Cecil 

 

 

 

Justice Secretary Ken Clarke is considering banning referral payments