Admiral reveals referral fee income
Insurance giant Admiral has revealed that it rakes in £7 in personal injury referral fees for every vehicle it covers. The figure appears in the company’s half-year financial report, which lists modest increases in ‘other revenue’, including income from referral fees.
Admiral insures 3.5m cars in the UK, suggesting that it earns around £24.5m each year from referral fees. In the first six months of 2012 this income contributed to net other revenue of £104.4m, up from £101.2m for the same period in 2011.
The figures give a sense of the impact of the proposed ban on referral fees in personal injury cases, which is due to come into force next year.
Last year it was reported that the Cardiff-based Admiral group was considering setting up its own personal injury law firm or buying into another, to guide insurance customers with claims.
Admiral declined to comment on potential plans to become an alternative business structure, or how it intends to deal with the shortfall following the referral fee ban.
Comments
Fairplay to Admiral for
Fairplay to Admiral for revealing one of the holy of holies of how much money Insurers are making from fuelling the 'compensation culture'
Similar candid confessions from Aviva and RBS etc would be nice
Experience in the industry suggests if they work on the basis that 1 in 5 policies sold result in a claim, and of those 50% are ones where the other driver is at fault and there is a claim to sell, that would give around 350000 potential claims to sell
Weeding out the bent metal claims, and ones where the claim was 'captured' elsewhere would leave around 10-20% of those- giving a base of around 35,000 claims to be sold -translated into the £24.5m giving a price of around £700 a case
Imagine a world where you could compare that to the statements from the insurance industry about the high cost of referral fees pushing up insurance premiums for the consumer as a major factor for the need for urgent reform to the whole sector and then may be even linking the 2 practices?