Direct Line hits £125m from solicitors since 2009 after scooping final £6m in referral fees

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6 August 2013

Income: Direct Line expects civil justice reforms to have positive effect longer term

Direct Line Group – which last month announced plans to launch its own legal business – made a final £6.1m in referral fees from solicitors this year before the ban was introduced on 1 April, its half-year results have shown.

It means that since the start of 2009 the insurer has received £125m from solicitors in referral fees, according to figures it published last year when it floated, and also banked tens of millions more in credit hire referral fees – £8.1m in the first half of 2013 and £17.5m in 2012 alone.

The 2013 half-year report said that recent trends supported the group’s view that taken as a whole April’s civil justice reforms – the referral fee ban, 10% uplift in general damages, end of recoverability of additional liabilities and reduced RTA portal fee – “are expected to be broadly neutral to operating profit in 2013 for the group”.

But with the extended portals that came into being last week – together with the possible reforms to whiplash claims next year – the balance will tip, it said: “Overall the group currently expects these reforms to be net positive for the group in the medium term.”

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This is expected to result in falling premiums, and the government has said it will be watching closely to see that this happens.

Paul Geddes, CEO of Direct Line Group, said: “The UK motor market remained competitive and dynamic, with significant premium reductions and the introduction of legal reforms. We believe the full effect of the reforms will take time to materialise and their ultimate impact is difficult to predict as it will depend on a change in the behaviour of claimants and lawyers.

“We continued to price based upon our observed claims experience, which was favourable. In the second quarter, this has helped us to reduce premium rates overall about 3% year on year, contributing to a stabilisation of our policy count.”

In response to the transport select committee’s recent report on whiplash, Direct Line backed suggestions for a reduction in the three-year limitation period and said claimants should have to report their claim to insurers within 90 days.

It also supported raising the small claims track limit from £1,000 to £5,000 for RTA personal injury claims, even though the committee was opposed.


4 Responses to “Direct Line hits £125m from solicitors since 2009 after scooping final £6m in referral fees”

  1. £125m from referral fees, tens of millions from credit hire referral fees…and the insurance industry has the gall to say that higher premiums are driven by greedy claimants and their lawyers.

    At best, how naive, and at worst how disingenuous of the government to say that they will be watching to see that premiums now fall.

  2. Martin Langan on August 6th, 2013 at 8:43 am
  3. The best evidence as to their part in creating a compensation culture

  4. Abdul hafezi on August 8th, 2013 at 7:39 am
  5. CEO Paul Geddes comments are absolute rubbish, there will be no driving down of premiums unless the government forces them to do so. All of these legal reforms have just played into the hands of people like Direct line and other insurers allowing them to increase their profits even further for their shareholders while laying of staff at an alarming rate in their crusuade to make hundreds of millions of pounds savings!

  6. Mark Dwyer on August 8th, 2013 at 12:37 pm
  7. It’s about time direct line started offering solicitors indemnity insurance. They’ve made enough money out of the sector. Time to put something back.

  8. Jason Cobine on August 16th, 2013 at 12:28 pm

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