How One Genuine Injury Lawyer Plans to Lower Insurance Premiums

How One Genuine Injury Lawyer Plans to Lower Insurance Premiums image url

by David Redmond on 4 Jul, 2012

Uproot the entire referral fee system and ban personal injury ‘auctions’. This is the wish of John Spencer – a veteran personal injury solicitor with a growing concern for the financial wellbeing of accident victims.

Speaking out from the Spencers Solicitors headquarters in Chesterfield, John Spencer has been raising awareness about the damaging effect of referral fees and the over sensitisation of fraudulent whiplash claims. He believes the government may be approaching the crisis in the wrong way.

At the insurance summit in May, Transport Secretary Justine Greening committed the government to driving down insurance premiums by the end of the year. The meeting involved a lot of government officials and figures from the insurance sector. On the agenda were subjects like telematics insurance technology and a crackdown on fraud in the ‘whiplash arena’.

Meanwhile, John Spencer implies on his blog that too much focus on the latter could distract attention from what he believes is a more serious issue – referral fees paid by insurers to various service providers.

Certain insurers alert certain lawyers to certain car accident compensation claims. The lawyers then pay the insurers for the information and make contact with the drivers involved – thus securing business themselves. The scheme is skewed to boost profits for both the insurers and the solicitors. Whereas the system is legal – John Spencer believes it to be an immoral obstruction of justice and a key contributor to rising insurance premiums.

Injury Auctions

Spencer argues that the personal injury auction is the most ‘dehumanising’ product to come out of the referral fees model. Insurers bunch cases together and sell them off in a bundle to the highest bidding solicitors – prices are presumed to be based on the severity of cases (and potential value in winning compensation).

The system is a way of securing a quick profit for the insurers but as the lawyers file more and more cases against them (and win), the insurers are paying out chunks of that profit in compensation again. In order to offset this profit loss – premiums inevitably increase.

While the Transport Secretary and Justice Minister focus on whiplash fraud, John Spencer ardently underlines the root of the problem – referral fees. His fair solution to the insurance inflation is as follows:

• Medical evidence ought to be provided before any accident claim is finalised.

• A greater understanding of whiplash and the extent of damage that can be caused through the injury is needed from all parties across the entire justice system.

• More transparency with insurance data is also needed – if claimant representatives can work with insurers to examine this data, claiming patterns can be identified and fraud prevention naturally improves.

• A duty for insurers to pass on savings to policy holders – any reductions in compensation costs, should be matched by a percentage reduction in premiums.

John Spencer has specialised in car accident compensation for almost 30 years and he is not pretending to be the voice of reason here – he is simply shining a light on what he believes is a much more important concern for British drivers than whiplash fraud.

About the Author

David Redmond

David Redmond is a Partner of Don Gilliard Finance Group. He is a fee-only, independent financial advisor and financial planner. For over 15 years, he has been helping individual investors and their families realize their investment goals.