Axa has made the decision to no longer accept referral fees from personal injury lawyers and has called for whiplash injury reform to eliminate fraud within the industry.
The move has come in response to the former Secretary of State for Justice, Jack Straw's call for referral fees to be banned in an article published in The Times.
The insurer said it had never sold customer details to personal injury lawyers or accident management companies, and with immediate effect would no longer accept fees from personal injury lawyers when it put its customers in contact with them to pursue valid claims.
Axa has estimated that around half of the recent increases in motor insurance premiums are related to the rise in bodily injury claims.
According to the insurer, what was ultimately needed was a fundamental evaluation of whiplash and other minor trauma claims to eliminate fraud and bring some sense back to the cost of these claims.
Unfair and unsustainable
Paul Evans, Group CEO, Axa UK, said: "As one of the leading insurance providers, we have decided that the only way to address the problem adequately is to lead by example.
"Over the last few years we have seen an exponential rise in personal injury claims - especially soft tissue injuries - whilst evidence suggests road accidents are decreasing. We have also seen a significant rise in claims made some years after the event which are therefore impossible to prove or to defend.
"It is unfair and unsustainable that drivers are being disadvantaged by exaggerated injury claims which drive up the cost of insurance. Referral fees have only served to promote an even greater number of injury claims and Axa will stop this practice whilst government implements the necessary legislation to restore order.
"I believe this move will be a positive first step in making the system more equitable and, ultimately, benefit customers through more affordable motor premiums."
source: insuranceage.co.uk
The ethical alternative to referral fees
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