Minister acts to drive down cost of motor insurance

12 April 2012

Millions of motorists will demand lower insurance premiums once referral fees in personal injury cases are banned, a minister said today.

Justice minister Jonathan Djanogly condemned the no-win, no-fee "racket" which is allowing lawyers and injury claim companies to collect millions at the expense of drivers.

Announcing a ban on referral fees, he said that insurance companies had signalled that the Government's reforms should lead to lower premiums.

"They are saying if you sort out the suing culture, if you sort out referral fees, then insurance premiums should come down," he said.

The ban came after the Office of Fair Trading said it would examine motor insurance as drivers faced rises of up to 40 per cent.

Referral fees are incurred when a no-win, no-fee claim is passed between claims firms, insurance firms and lawyers. They can claim them back from the defendant or their insurer.

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