Parkers calls for ban on referral fees

Press Release   •   Jun 10, 2011 14:43 BST

An investigation by Parkers, the car buying website, has uncovered that it’s not just solicitors, recovery companies, courtesy car companies and motoring related organisations[1] causing motoring insurance costs to rocket. An over-inflated, ‘jobs-for-the-boys’ payments system involving the police, health professionals and personal injury lawyers is also pushing up people’s insurance premiums.

This referral system is legal but a leading trade body says police officers, doctors and nurses are handing over details of accident victims for cash – an illegal practice that contravenes Data Protection rules. Andrew Wigmore, spokesman for the Claims Council – a trade body representing 120 claims management firms in the UK – said: We are aware that police officers, nurses, doctors, ambulance men and women have sold details of accident victims to claims management companies. Remember, for low-paid workers such as policemen and nurses, it is very tempting if you are offered between £50 and £100 just to pass on someone’s details.”

The Association of Chief Police Officers vowed to punish staff found to be passing on details of accident victims. An ACPO spokesman said: “Where there are allegations about an individual officer, or a recovery operator, taking money to provide details of accident victims to claims management companies without their prior consent, these should be reported to the local police force. This kind of practice is illegal and would be rigorously investigated.”

One of Parkers’ editorial team fell victim to the illegal practice after he was involved in a damage-only accident with an ambulance. He included his personal email details on a police accident report and within weeks they were in the hands of countless personal injury lawyers desperate for business.

This referral system starts as soon as police officers arrive on the scene of a road traffic accident when a recovery company is required to tow away a damaged vehicle.

Then the details of the parties involved are forwarded to an accident management company which starts the ball rolling by organising a courtesy car. The courtesy car referral fee, however, is usually the start of a chain that one insurer described as a ‘feeding frenzy’.  

Details of accident victims are generally passed on to a claims management company that might cold call them. If that victim pursues a claim with the claims management company, a fee is paid to the referring agent and it’ll get even more costly when the company refers the person to an injury lawyer, who will also pay to get the business.

If that lawyer refers the case to a barrister if it goes to court, another fee will be paid. Referral fees vary but they can be as much as a £1,000. Indeed, the Insurance Fraud Bureau says it has witnessed tens of thousands of pounds paid by solicitors to claims management companies for claims, many of which turned out to be manufactured.

Parkers is aware that the referrals system is not the sole cause of rocketing insurance premiums: insurance fraud involving crash-for-cash scammers, rising costs in parts and repair labour costs, more expensive car technology are all factors that have conspired to push premiums up by 40% over the past year.

However, there is no doubting that the ‘feeding frenzy’ as described by one insurer is not merely hyperbole. All agencies involved realise that there’s plenty of money to be made and that the costs will eventually be met by the insurers, which will in turn be passed on to the consumer.

Kieren Puffett, Editor of Parkers, said: “Insurance companies make a lot of money and it’s a fair argument that the referrals system has become a scapegoat for a much bigger problem. Still, we believe that the referrals system points to a ‘jobs for the boys’ network that should be banned. We also believe there should be a more robust system in place to prevent police officers and health professionals passing on details of accident victims.”

[1] Last month it was revealed by the AA that insurance premiums had risen by 40% in the last 12 months and the Association of British Insurers pointed the finger at a referrals system where solicitors, recovery companies, courtesy car companies and other motoring related organisations pay fees to secure business after an accident. helps you to choose the right car at the right price. Our team of experts is dedicated to empowering you with the advice and help that you need to negotiate the best deal.