Police to be drafted in to reduce taxi insurance cost
Taxi drivers could soon look forward to a change in the trend of spiraling insurance costs after a new report called for fraud issues to be addressed by a dedicated police unit.
The cost of insuring a taxi has never been higher and motor insurance premiums are rising at an alarming rate. Moneysupermarket car insurance statistics suggest that the average cost of a policy will increase by 40 per cent in 2011 and waiting to renew your insurance could cost you as much as 44 pence per day.
Hope for a change in these expensive trends has been generated by a new report from the Transport Select Committee, which casts personal injury lawyers and accident management companies in something of a dim light.
A major focus of the report are the ‘referral fees’ being paid to garages and insurers in exchange for personal information about people involved in accidents. This information is highly valued by injury lawyers and accident management firms, who race to contact drivers involved in accidents.
The report highlighted examples of this kind of behaviour, in which drivers would receive text messages from injury lawyers within minutes of having visited a garage to check their car in for repair following an accident.
Over time, the growth in the number of personal injury lawyer companies and accident management firms has led to a striking rise in the number of personal injury claims being made by people involved in accidents. More disturbingly, the Transport Select Committee’s report pointed to a rise in ‘staged accidents’ as people sought to benefit from ‘no-win, no-fee’ claims.
Transport Committee Chairman Louise Ellman said: “Wider access to justice is to be welcomed, but it has come at a significant cost, with far more personal injury claims being made than in the past.
“The police made plain to the committee that ‘staged accidents’ are on the increase and that, so far, we have been lucky there have been no fatalities resulting from such incidents. That luck may run out unless the insurance industry acts rapidly to help the police target this kind of insurance fraud.”
The report called for transparency on referral fees so that consumers would be more aware of where their money was going.
Ms Ellman added: “Consumers are largely unaware of how much money moves around the insurance industry in this way when they make a claim. They deserve to see where their money is going. If insurance companies cannot agree a method by which to improve transparency around referral fees, then the government should step in, with legislation if necessary. “
However, the Transport Select Committee’s report fell short of endorsing the recommendations in Lord Justice Jackson’s review of civil litigation costs, which called for decisive government action against injury lawyers and accident management companies.
Towers Watson, a risk and financial management organisation, criticised the report for not going far enough.
In a statement, Towers Watson’s Duncan Anderson said: “The committee has recognised that there is something not right about bodily injury claims costs rising 30% annually when the number of traffic accidents has been decreasing steadily for a number of years.
“But I would like to have seen a stronger endorsement for the recommendations of the Jackson Review rather than recommending a further study next year into what can be done to bring the level of personal injury claims more into line with other countries.”
He added: “It’s really only accident management companies and personal injury lawyers who refute the link between referral fees/‘no win, no fee’ arrangements and bodily injury costs. One only has to look to the evidence presented on the regional differences, particularly between England and Scotland, to understand the effects.
“Calling for transparency on referral fees throughout the insurance industry is good for the consumer, but delaying addressing the underlying issues certainly is not.”
