Referral fees axed in bid to lower van insurance premiums

The burden of the compensation culture rife in the UK is having a massive impact on the cost of car, fleet and van insurance renewal premiums, according to the government.

Based on information accumulated by former Labour MP Jack Straw in summer of last year, there is a constant cashflow going to insurance companies, claims management specialists and even garages who provide information of road traffic accients and repairs to personal injury claims solicitors; those costs are then being passed back to the honest motorist when next they take out their car or van renewal policy.

The source of the majority of this mountain of cash is from vehicle insurance policies, where the additional cover for personal injury has been added as an ancillary product, if it’s not already been included in the base, comprehensive policy document or quote.

Jonathan Djanogly, our justice minister, has identified this ever-increasing threat to the economy. Acknowledging that there are genuine cases, the purpose of these actions is to weed out the ‘spurious’ claims, and not to invite an envronment in which people are afraid to go out of their front door without being sued or taken to court for one dubious claim or another.

And the government aren’t satisifed with just banning the referral fees that have seen the spiralling costs of van insurance premiums. With huge investments in advertising fees by personal injury solicitors inviting the general public to claim against their insurance on a ‘no win, no fee‘ basis, the department of justice are looking into ways to make the claimant pay at least a part of the costs for taking their claim to court.

This will be good news for UK business, according to Djanogly, as the insurance sector will be lobbied to pass those savings back to reduce the renewal costs of your van insurance policy.

However, the Association of British Insurers director general, Otto Thoresen, was quick to point out that the motor insurance sector of the industry has been long paying out more than it has been receiving in premiums, a sentiment backed up by AA Insurance, as reported here on, recently.

Other sources have reported that this action is not in direct response to the Office of Fair Trading‘s ongoing investigation into the unprecedented rise in motor insurance, in general.

Chief Executive of Which?, Richard Lloyd, welcomed the move by the government. Anything that can relieve this extra burden n our income at a time when householders and businesses are stiil ‘feeling the pinch’ of the economic climate will be welcomed.

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