Insurers and Claims Management Companies cultivated cosy relationship, say campaigners
An incredible 75% of the £2.8bn total turnover of claims management companies during the last ten years has come from referrals by insurance companies, Access to Justice (A2J) has revealed.
A2J has studied the data from the 10th Anniversary Report of the Claims Management Regulator and research conducted by Aviva for their ‘Road to Reform’ report in 2014 which revealed 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.
Martin Coyne, managing director of Ralli Solicitors and chairman of A2J, said: ‘It is extraordinary that the insurance industry has, for the last decade, been responsible for nurturing the claims management sector.’
‘Insurers have openly condemned CMCs at every opportunity and yet behind closed doors they appear to have developed an uncomfortably cosy relationship. It’s about time this duplicity is exposed for all to see.’
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.
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.