Axa Bans Accident Referral Fees

Axa, the French-owned insurance group, has announced it will no longer accept referral fees from personal injury lawyers – putting pressure on other insurers to follow suit.

The company has 1.5 million motor and car insurance customers in the UK, and although it has never sold customers’ personal details to accident management firms or personal injury lawyers, it will no longer accept fees when it puts clients with valid claims in touch with them.

The move won’t come cheap, with the company’s UK chief executive claiming it would cost millions of pounds annually. But he was firm about Axa’s stance: “The industry needs to be tidied up, but it will not tidy itself up. This has to be stopped; this dysfunctional market cannot be allowed to continue,” he said.

Axa’s decision helps it to take a moral lead, following an investigation by former Justice Secretary Jack Straw which demanded an end to insurance companies profiting from personal injury referral fees. It also puts pressure on the company’s competitors to follow suit.

But according to The Times, rivals RSA, Aviva and RBS “repeated calls for a blanket ban but refused to act unilaterally”.

Spurious car insurance claims

Axa said: “Other countries have banned whiplash claims either totally or below a certain speed threshold and, while our industry needs to properly compensate those who have suffered injury, we call on the government to bring about changes that will have the effect of limiting this exponential rise in spurious claims.”

However, the Government has rejected calls to ban referral fees, with officials arguing they can be beneficial in some cases. Instead ministers are looking to introduce greater transparency to the practice.

The Legal Aid Minister Jonathan Djanogly reassured consumers that “we are looking at all of those issues for abuses and reforms”, and added: “Referral fees and adverts do not exist in isolation, they are funded by an excess of money swelling around the system. Banning anything is not necessarily going to solve the problem, it will find a different route.”

Moneyhighstreet comments: “Axa’s move is welcome, and we hope other insurance companies follow suit by ending personal injury referral fees – while resisting the temptation to pass on the costs to consumers.

“If your car insurance is up for renewal, it’s particularly important to shop around for the best deals. Price comparison sites are a good place to start if you want to save money.”