Credit rating agency Moody’s yesterday urged UK motor insurers to follow AXA UK’s lead and stop taking referral fees from car injury claims.
Moody’s said it believes AXA’s stance on referral fees was good for the industry and increased pressure on its peers to follow suit. The fees have led to a surge in personal injury claims related to car accidents and caused motor premiums to leap 40 per cent in the past year.
It believes insurers’ legal fees from such injury claims “more than outweigh the referral-fee income that insurers receive when they refer claims to lawyers” so any reduction in referrals will benefit the firms’ profitability and creditworthiness.
But it warned that AXA’s small size in the motor market may give its peers less incentive to follow its lead.