I am sure that many of us have seen reference to this in the news lately thanks in the most part to the efforts of the Home Secretary Jack Straw to get this practice outlawed.
So what is the ‘Dirty Secret’ ?
This is making reference to a practice which has been around for a number of years whereby, without the prior agreement of policyholders, insurers sell details of your data to Third Party Recovery Solicitors and other similar types of organisations.
These details are sold for anything from £200 to £1,000 per case.
It is currently estimated that this growing industry is worth at least £175 million.
These companies then use this data to contact the individuals to try to convince them to make a claim, normally for bodily injury that they may not have previously considered.
Why would Insurers do this ?
The only conclusion to this seems to be to generate short term profit based on increased investment income.
Will this practice ultimately increase our premiums ?
Yes beyond any doubt it will.
Additional claims, especially on motor insurance, will always equal increased premiums.
So, by actively encouraging more claims to be pursued, more will be paid out and ultimately premiums will rise.
To an extent then Insurers cannot lose in this practice, they generate additional income by selling the data and cover any increased claims they incur by increasing premiums.
How much difference has this made to the amount of claims being paid ?
Jack Straw quoted that the cost of personal injury claims had doubled to £14 billion in just 10 years.
‘This is Money’ has reported that the UK is now the whiplash capital of Europe and premiums have risen by as much as 40% in just one year.
How do these Third Parties make contact with us ?
Normally by continuous phone calls although texting has becoming increasingly common.
I personally have had experience of this following an accident that I was involved in a couple of years ago.
The call came long after the claim had been settled as non fault on my part so I had no idea who these people were.
They asked if I had considered making a claim for personal injury and that they could take the case on for me on a no win no fee basis.
They were a bit surprised when I told them that I was not actually in the car at the time as it was hit whilst parked !
Clearly this same data is sold to multiple companies as I have since have other call from companies offering the same service, it seems there is no way to find out who your details have been sold to.
Are there any plans to do anything about this ?
The Home Secretary is trying to push for firmer regulation in this area but at present most Insurers are continuing the practice.
This move also has the support of the Association of British Insurers so we can but hope that this comes to an end sooner rather than later.