Insurance companies in Northern Ireland have come under fire recently for the rising cost of auto insurance. The insurance companies behind the rising rates are staunch in their claims that higher premiums are the result of the increased number of personal injury claims coming in throughout Northern Ireland. While it is true that the number of personal injuries claims coming from the region is increasing, it is not because of people’s driving habits.
According to the British Insurance Brokers Association (BIBA), the real reason insurance rates are rising is because of the number of claims management companies putting pressure on drivers to file fraudulent claims.
Paul Hatty, chairman of the Northern Ireland branch of the BIBA, asserts that many claims management companies are using aggressive marketing techniques to convince consumers into filing faulty claims. Fraudulent claims account for more than £900 million (more than $1 billion) each year. Hatty believes that the reason the issue has gotten so far out of hand is due to the complex relationship amongst lawyers, insurance companies, and claims management companies.
Insurance companies often steer policyholders toward claims management firms or personal injury lawyers after an accident in which the client is injured. The insurers are then rewarded with a referral fee. Management firms and lawyers then pressure clients to submit claims that are, sometimes, less than accurate. The entire scheme is driven by the lucrative nature of personal injury claims.
Hatty, along with the BIBA, is calling for changes to be made to the Northern Ireland auto insurance industry to dissuade insurers from participating in what is being called a “merry-go-round scheme.” Until changes can be made, however, insurance rates will continue to climb higher.