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MSE News: David Cameron vows action on car insurance costs

edited 30 November -1 at 1:00AM in Insurance & Life Assurance
42 replies 4.2K views
Former_MSE_HelenFormer_MSE_Helen
2.4K posts
edited 30 November -1 at 1:00AM in Insurance & Life Assurance
This is the discussion thread for the following MSE News Story:

"The Prime Minister is today hosting a summit to discuss ways to bring down soaring car insurance premiums ..."
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  • I don't quite see the clear statement 'We will outlaw referral fees' in the above.
  • davidgmmafandavidgmmafan Forumite
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    Two things concern me firstly its a summit and we can remember what how inspiring the summit with the energy suppliers was...

    Secondly this man said before the election, on the subject of bank charges, what we would do is refer this to the competition commission. Now whether he meant just the issue of charges or banking as whole one thing is certain it has not happened.

    Clearly these fees are bad but I'd like for once the see the insurance industry do something regarding young drivers rather than shrug and put the premiums ever higher...
    Mixed Martial Arts is the greatest sport known to mankind and anyone who says it is 'a bar room brawl' has never trained in it and has no idea what they are talking about.
  • InsideInsuranceInsideInsurance Forumite
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    I really struggle to see what the solution can be for this as almost everything hinted as either unworkable or easy ways to get round it.

    The only real "solution" would be to bar any claims for whiplash type injuries but there are without doubt some who do suffer real and long term injury from whiplash and is it really fair to ban them from receiving compensation for the pain, suffering and loss of amenities that were not their fault?
  • mikey72mikey72 Forumite
    14.7K posts
    The hire car referral fees, the repair garage referral fees, the claim management referral fees, the solicitor referral fees, all must be taken out of the equation, then a true cost of what is actually paid out could be found.
    As most of these are initiated by the insurers themselves, there should be a punitive penalty levied on any company that passes on clients details, so rather than gaining several hundred pounds for pushing their own customer to male a bogus claim against the third party, they should be forced to pay instead.
  • InsideInsuranceInsideInsurance Forumite
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    mikey72 wrote:
    there should be a punitive penalty levied on any company that passes on clients details

    Ultimately the referral fees can be paid because of the amount of profit there is to be had in those lines of business. For the bigger insurers you would have to ask if the referral fees were blocked would they just give up on this revenue stream or look to replace it by simply setting up/ buying their own credit hire company etc? They'd thus complying by eliminating referral fees but not removing the problem.

    Its also again not to say that the credit hire company still charges £X per day and rather than giving the insurance company £Y as a referral fee they give preferential rates when they are the defendant or lower cost on cars provided outside of credit hire etc.
  • mikey72mikey72 Forumite
    14.7K posts
    Ultimately the referral fees can be paid because of the amount of profit there is to be had in those lines of business. For the bigger insurers you would have to ask if the referral fees were blocked would they just give up on this revenue stream or look to replace it by simply setting up/ buying their own credit hire company etc? They'd thus complying by eliminating referral fees but not removing the problem.

    Its also again not to say that the credit hire company still charges £X per day and rather than giving the insurance company £Y as a referral fee they give preferential rates when they are the defendant or lower cost on cars provided outside of credit hire etc.

    That's why I think a punitive fine on the insurer is the only way ahead.

    It you remove the profit they make from initiating the whiplash claims, and make it cost them, there will be a lot less whiplash claims overnight.
    Maybe the fines could go into subsidising younger drivers policies.
  • InsideInsuranceInsideInsurance Forumite
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    But that's the point, if they owned the credit hire company, there is no referral fee paid.
  • edited 14 February 2012 at 12:50PM
    k3llyjk3llyj Forumite
    4 posts
    edited 14 February 2012 at 12:50PM
    Insurance companies don't make money from car hire referral fees. Infact insurance companies DO NOT supply the hire cars themselves - that is up to the garage that is supplied with the work to pay out for (that insurance companies also systematically rip off)

    They do not pay garage referral fees either. Insurance companies need to be investigated properly and fully and exposed for what they are.

    It infuriates me that they give the impression of what most of you have commented on in referrals to garages when it just does not happen. (cash for claims however, does! The insurance companies sell their own data)

    How about the independent garages going out of business because they have to pay VAT on parts and paint and become 'too expensive' - when insurance companies are taking this work 'in-house' and paying ZERO VAT. Perhaps that is something the government should be looking at. :mad::mad:

    In the report it states whiplash claims are adding £90 annually to someones premium. What about the rest?
  • Yeah credit hire referral does hurt insurers more than it helps them in the fees. The reason they do it is that if someone is to get a fee they think it may as well be then, if it's sauce for the goose then it's sauce for the gander.

    Of course the problem with credit hire, personal injury claims et cetera does stem from shoddy treatment of innocent third parties in the past. This meant there was a demand for a service to help with the claiming element who built in a profit element (as you would expect), pushing up costs which increases premiums. Insurers did partially cause this by trying to keep costs down from third parties, but that's easy to say with hindsight.

    For the reasons in the previous paragraph I am always somewhat sceptical and cautious about things that are supposed to be huge cost reducers and cure-alls. The law of unintended consequences seems to be pretty good at biting you back on these.
  • mikey72mikey72 Forumite
    14.7K posts
    But that's the point, if they owned the credit hire company, there is no referral fee paid.

    True, they would keep it as seperate business, then make even more profits from that business, while making the combined ratio look worse, and pushing another hike in premiums.
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