Car insurance provider, Admiral, saw their share price fall this week by 30% after issuing a warning that they are likely to see a dip in profits after being hit by a higher than average level of personal injury claims of late.
The recent ban on referral fees introduced by the government in an attempt to bring an end to the compensation culture in the UK has had a negative effect on many insurance companies, including Admiral. The dip in profits is reported to be linked to the amount of revenue referral fees bring in for the Wales based insurance company, and since these have now been scrapped, the effect is being felt in Admiral’s squeezed profit margin.
However despite the impact the ban on referral fees has had on the these insurers, Admiral has welcomed the move as they support the measures which are being taken to bring the compensation and personal injury claim culture under control in Britain.
There has also been much discussion in the insurance industry about how to tackle the rising number of fraudulent personal injury claims, many of which are being masterminded by large criminal gangs, it’s hoped the move to ban referral fees will go some way to tackling this issue.
As a result of their higher than average rate of personal injury claims received recently by Admiral, the company has predicted full year pre tax profits towards the lower end of the figure estimated by analysts.