Having just paid my car insurance fee that, despite having nine years no claims bonus, rose once again I was delighted to hear that referral fees are to be outlawed and that The Office of Fair Trading is putting motor
insurance under the spotlight after premiums rose by
40% on average in a year.

First step in tackling dysfunctional compensation system
The Association of British Insurers – said it welcomed the announcement. As reported by the BBC, Director General Otto Thoresen
said: “We are very pleased that the government has listened to the
insurance industry’s campaign for a ban on referral fees.

“Banning referral fees is an important first step in tackling
our dysfunctional compensation system, and needs to be accompanied by a
reduction in legal costs and action to tackle whiplash if honest
customers are to benefit from these reforms.”

Change in culture and teams
Insurance companies, law firms, garages and other interested parties in the referral system merry-go-round will have to change their systems and their teams to reflect these changes.  That either means redundancy or allocation to other jobs (on the basis that the entire system doesn’t move underground).

Reduced bills
It’s interesting how there is expectation that once the system is outlawed and the teams that manage the current the system are disbanded, saving employment costs, and the huge compensation costs reduced that insurance premiums will fall.

I will await next year’s policy renewal notice with interest!