Admiral Insurance may establish in house law firm to handle claims

Admiral Insurance has said that it is “considering its options” over whether to become an alternative business structure (ABS) and establish an in-house legal function to deal with insurance claims.  The move is believed to be a response to the anticipated loss of income which will occur following a ban on referral fees in personal injury cases.

Although profits at Admiral rose 13% in 2011 to £299m, the company is clearly keen to try to mitigate the effects of the referral fee ban, which is scheduled to come into effect in April 2013.

Personal injury referral fees currently earn the company around £7 per vehicle, with a further £5-6 per car in referral fees from credit hire (which are also currently under threat due to an Office of Fair Trading investigation).  

Given that Admiral insures 3.3 million vehicles, these numbers soon start to add up, and Admiral states that referral fees account for approximately 5.5% of its total UK profits.  It is therefore not surprising that they are very keen to find ways of preserving that income.