Insurers responsible for £2.8bn in claims management company turnover, say campaigners
Press release : 7 August 2017
75 per cent of the £2.8bn total turnover of claims management companies during the last ten years has come from referrals by insurance companies.
After studying data from two sources: The 10th Anniversary Report of the Claims Management Regulator, and research conducted by Aviva for their Road to Reform report in 2014. Access to Justice (A2J) has estimated that as much as £2.2bn, or 88% of the total turnover from claims management companies in the last ten years could have originated from insurers and insurance brokers.
Andrew Twambley, spokesperson for A2J, which is campaigning against the government’s proposed reforms to personal injury compensation, said it illustrated that insurers have deliberately pushed whiplash and other non-fault personal injury claims to CMCs to generate revenue and load claims settlement costs onto their competitors.
According to A2J the statistics show:
• Approximately 780,000 whiplash claims were officially registered with the official Compensation Recovery Unit in 2016/17.
• Aviva research showed that 55% of all personal injury referrals to CMCs have gone through insurers directly, equating to £1.375bn of total CMC turnover during the last decade.
• According to Aviva a further 20% claims go through a personal injury lawyer, after the claimant has been referred to the PI lawyer by an insurers. Some insurers own their own law firms, so this is an important source of revenue.
Although A2J accepts some customers suffering injuries from road traffic accidents (RTAs) respond to advertising by law firms, the vast proportion accepted by law firms come from referrals by insurers.
• Aviva says Insurance brokers refer 13% of all personal injury claims to CMCs, but the broker (not the insurer) will take the fees as part of their own income. That equates to £325m of the total CMC turnover.
It is not known what revenue insurers collect as a result of these referrals to CMCS, but Twambley said: “The data shows that it is insurers themselves who have, over the last decade, been responsible for the creation of the claims management sector and given it most of its turnover.”
“It is impossible to say from the data how much money insures have made from referring these cases and how much it has cost the industry to settle cases referred by their competitors. Perhaps the ABI would care to enlighten us, and also explain why they are campaigning against an industry that their own members created and nurtured.”
He said: “Insurers have blamed personal injury lawyers and the public for fuelling a compensation culture, but this is a myth. The reality is that, during the last decade, the vast majority of claims for whiplash have been generated by insurance companies.”
Infographic from Aviva’s ‘Road to Reform’ 2014.
A2J represents the interests of the public and is supported by the broader personal injury (PI) sector. Its prime focus is to respond to the government’s proposed road traffic accident compensation reforms. A2J provides a cohesive voice to fight these proposed draconian measures; it will work with the government and other interested parties to create sensible, balanced alternatives which protect individuals’ rights, while addressing the government’s concerns, particularly in relation to claims fraud.
For more information please contact: Ben Welsh 07568 382040