Crawford & Company, one of the world’s biggest firms of loss adjusters, has announced that it is setting up an alternative business structure in the UK to offer an end-to-end claims management services. Crawford – which is listed on the New York Stock Exchange – has 27 offices in this country.
A “fundamental review” of claims management companies – along with a cap on the fees that they can charge consumers – was announced by Chancellor George Osborne in today’s Summer Budget.
Insurance giant RSA, formerly Royal and Sun Alliance, has entered the legal services market by obtaining a licence for an alternative business structure in partnership with national firm Parabis. RSA Law will go live next month.
Irwin Mitchell has announced the launch of an alternative business structure (ABS) with online insurer esure, called IMe Law. The move is the latest in a series of ABS deals between insurers and law firms.
Joint ventures between solicitors and insurance companies as alternative business structures which enables insurers to take in income what they would have received in referral fees will not be caught by the upcoming ban, the Solicitors Regulation Authority confirmed last week.
We kind of all knew it anyway, but just how much money a large insurance company like the Direct Line Group makes from referral fees still took my breath away. As we reported earlier this week, the group received £110m from solicitors in the three and a half years since January 2009. Call it £30m a year and extrapolate (the group’s market share is 19% of motor and 18% of home insurance) and you are looking at around £150m a year going from the pockets of solicitors to insurance companies for the privilege of receiving cases. And that’s before the £100m or so insurers make every year from credit hire referral fees.
“Numerous” external investors will appear alongside consolidation and new structures once the “floodgates of change” hit the personal injury market next year – with just five or six claimant firms likely to dominate – an authoritative new report has predicted.
Creating a multi-disciplinary practice, spinning off new services and accessing external investment to finance growth are the main goals of commercial law firms considering converting to alternative business structures, a new survey has found.
The government needs to provide further clarity and guidance on how the ban on referral fees will operate in practice, the Solicitors Regulation Authority has warned. Issues such as the definition of a referral fee need to be resolved.
The ban on referral fees should not be limited to personal injury, a committee of MPs has said. It also called for the Information Commissioner to have the power to compel audits of law firms to check for breaches of the Data Protection Act.