MSE News: Car insurance cost hope after fees ban

This is the discussion thread for the following MSE News Story:

"The Government is banning fees it says encourage a compensation culture that in turn leads to insurance hikes ..."


  • edited 9 September 2011 at 10:25AM
    ReaperReaper Forumite
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    edited 9 September 2011 at 10:25AM
    It's about time, as I said in yesterday's news story about the OFT probe.

    I don't see why it has to be months before it is introduced, it sounds simple enough. But better late than never I guess.

    I would also like to see some limits on the "no win no fee" system. I know it is meant to help the poor but in practice it just means people try it on with made up claims like whiplash because it costs them nothing if they fail. There should be some capped cost to the loser when they lose a personal injury case.

    EDIT: I missed the bit in the article that says this is partly happening. At least we are moving in the right direction at last:
    The Government is changing the law so in future the person making the claim will have to pay the success fee.
  • SystemSystem Forumite, Community Admin
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    I fear that the ambulance chaser (law firms) will simply use an alternative method of finding contact details for people involved in car accidents.

    And there will still be the groups of criminals who stage accidents so that they can claim for injuries.

    And I doubt the insurance industry will reduce premiums as a direct result of this, but the ban, if approved / passed, may help to slow down the future increases, maybe :undecided
  • WestonDaveWestonDave Forumite
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    It will need to be done carefully otherwise the claims management companies will simply change themselves into marketing companies. The current system has a CMC (lets say InjuriesRus) that advertises and gets people to phone them - these cases are then so say vetted by the CMC, and then sold to the law firms for anything up to £750 per case. To a degree law firms have little choice - TV advertising is expensive and beyond the reach of most smaller firms, so the only way of getting the work is to pay the referral fee (unless you have a good enough local reputation to pull in work directly). Ban "referral" fees and all that will happen is that InjuriesRus will then sell "shares" in a marketing campaign - so if it reckons it will cost say £750,000 to run a campaign and it will pull in 1000 cases roughly - it will charge firms £7500 for a 1% share of whatever cases it gets. It still works out as roughly £750 per case but is now no longer called a referral fee.

    Its also interesting to see the ABI bleating about this - they are as bad as anyone else! Insurers also sell on details and have cosy contracts with overpriced repairers - a friend of mine had to take his car 20 miles to get it repaired despite there being a main dealer for that type of car just down the road - all because this one bodyshop had stitched up a deal with the relevant insurer to get all their repair work.

    That said if you've got shares in any accident management companies - e.g. Helphire, they might look a bit sick for a while!
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  • InsideInsuranceInsideInsurance Forumite
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    Did the laws on solicitors firms actually come into effect? I remember 5 years ago or so it was proposed to change the laws that limit who can own solicitor firms etc... if these did come into effect and fees are banned then you'll see the big players in the market start buying up solicitors firms I imagine... mainly going to be the garages etc that will lose out until the loophole is found.
  • fordyfordy Forumite
    254 Posts
    Ultimately if there is any change and premiums do come down after the investigations and rule changes, are we allowed to go back to them and ask for a partial refund? Essentially we are being mis-sold and overcharged are we not?
  • The best thing to do would be to severely cut down on whatever insurance is responsible for or make it entirely optional.
  • fordyfordy Forumite
    254 Posts
    but the government wouldn't be able to gather yet more taxes from us if that happened.
  • corbyboycorbyboy Forumite
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    Is this the same Government that promised to outlaw clamping on private land?

    I will believe this when I see it!
  • thenudeonethenudeone Forumite
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    Arg wrote: »
    The best thing to do would be to severely cut down on whatever insurance is responsible for or make it entirely optional.

    Optional third party motor insurance???
    Are you serious?
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  • fordyfordy Forumite
    254 Posts
    if something is required by law, surely it shouldn't be run at a profit, right?
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