Insurers prepare for fight over referral fees in consultation

Leading insurers are planning to fight for referral fees to be included in the government’s upcoming consultation on litigation costs.

The Ministry of Justice is to consult this autumn on implementing Lord Jackson’s proposals on funding arrangements, most notably conditional fee agreements (CFAs). But it plans to leave out key recommendations, including referral fees.

Allianz head of motor claims Martin Saunders said: “It is a question of going back to our peers and discussing with the ABI to see how we can assist in making referral fees part and parcel [of the implementation process].”

QBE head of strategic claims management Mike Noonan added: “Referral fees have been excluded from that framework but there is no reason why we can’t lobby against them from within that framework.”

The government argues there is no need to consult on referral fees; the Legal Services Board will examine their role in the claims process.

Claims directors are concerned the board will take a soft line following a Legal Services Consumer Panel report in May that showed referral fees do not harm clients.

AXA managing director of claims David Williams said: “The last thing we’d want is for a really good piece of work to be hampered by the fact that the Legal Services Board didn’t take the problems caused by referral fees seriously enough.”

An MoJ official said: “Work is progressing on other areas covered by Lord Jackson’s review, including fixed recoverable costs and referral fees.”