AXA boss calls on industry to team up and eliminate credit hire

The AA Insurance, AXA and RSA have responded to the House of Commons transport select committee’s second report on the cost of motor insurance.

AA Insurance director Simon Douglas backed the report and said its recommendations would help “kill the compensation culture that has sharply driven up car insurance premiums”.

“We have long been concerned that the proliferation of personal injury and accident management firms has encouraged people involved in a no-fault accident to make personal injury claims or even fraudulently stage collisions in order to make such claims,” he said.

“A claims culture has developed to the extent that it has become accepted that if another vehicle hits your car, you should make an injury claim. That’s regardless of how serious the injury is, or even if no injury has actually been suffered. The transport committee has clearly recognised that this has driven up premiums for everyone.”

AXA group chief executive, AXA UK and Ireland, Paul Evans supported the conclusions of the committee too.

“While the Ministry of Justice’s move to ban referral fees in personal injury cases is a crucial step to curbing the compensation culture, AXA maintains it will not, in isolation, succeed in lowering insurance costs for drivers,” he said.

AXA was in talks with other insurers to help remove credit hire from their respective claims processes, Evans added.

“We continue to engage other insurers to reach bilateral agreements that remove credit hire from our respective claims processes, and we call on all participants in this market to work together to eliminate this and all other practices that result in higher motor premiums,” he said.

“AXA has previously called on the government to reduce the fixed fees paid to personal injury lawyers as we believe the huge profit margins this generates has exacerbated the compensation culture.”

Fixed fee cuts of at least 50% are needed to strike a fairer balance between access to justice and removing fraudulent and exaggerated claims, he said.

“It is unsatisfactory that society must pay for the cost of whiplash claims brought by those seeking to profit from a ‘condition’ that cannot be proven objectively.”

RSA chief executive, UK and western Europe Adrian Brown also agreed with the findings of the report and that personal injury claims are the root cause of rising premiums.

“We fundamentally believe that a wider root and branch review of the structure of personal injury legal fees and payments for soft tissue injuries is needed,” Brown said.

“We would urge the committee to ensure any whiplash reforms go far enough to address the volume of claims and the burden of proof.”

A ban on referral fees and a reduction in credit hire costs are needed, rather than any extra transparency for referral fees, Brown added.

“We are disappointed that the committee seems to have targeted their criticism at insurers rather than tackle the dysfunctional nature of the system, which has driven the increase in premiums,” he said.