- West Midlands Police made over £622,000 in a year from contractor tip-off fees regarding 24,891 vehicles
By James Slack
Last updated at 12:18 AM on 28th June 2011
Police are raking in millions of pounds from a 'huge racket' in which they cynically sell on the details of drivers who have had a road accident.
Officers tip off preferred local garages and breakdown firms - who come to collect the car, then hit motorists with removal and storage charges.
For this service, the police demand a so-called 'administration fee' of up to £25 per vehicle.
'Racket': Police are raking in millions of pounds from cynically selling on the details of drivers who have had a road accident (file photograph)
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Details of this and other dubious practices emerged amid a blazing row over the way police, insurance companies, unscrupulous lawyers and breakdown firms conspire to exploit powerless motorists.
Insurers blame unnecessary police charges and the compensation culture - which has seen damages claims for trivial or imagined injuries spiral - for the soaring increases in the annual premiums they charge all drivers.
But they too stand accused of being deeply involved in the racket.
According to ex-Justice Secretary Jack Straw, insurance companies are selling details of their own clients to 'no-win, no-fee lawyers' for up to £1,000 per person.
These 'claims managers' then bombard the motorist with unwanted texts and phone calls offering to help them to pursue compensation claims for often non-existent injuries.
Some 80 per cent of all claims are for 'whiplash' which is conveniently undetectable by scans or X-rays.
The cost of settling the spiralling bill for personal injury claims is immediately passed on to the driver in higher premiums - while insurers are allowed to keep their lucrative 'referral' fee.
Mr Straw said yesterday that the entire system had become a 'huge racket' and that the insurance industry saw it as 'our dirty little secret'.
He added: 'The garages, the recovery firms - even the police are selling on this information.'
BUT IS IT LEGAL?
The Information Commissioner receives 100 complaints every month from motorists bombarded with phone calls and texts urging them to claim compensation.
Christopher Graham has begun an investigation into whether the tactic is a breach of data protection laws.
Insurers are expected to defend themselves by pointing out that, on insurance renewal forms, they warn that a client's personal information could be passed on to 'relevant third parties'.
Mr Graham wants to establish if this could reasonably be understood to mean claims handling companies.
If he decides it does not, insurers could be found in breach of the Data Protection Act.
The police tactic of obtaining referral fees from local garages is legal because they insist that the information goes no further.
Garages are told they will be in breach of the Act if they contact any third party.
The police's role was revealed in evidence to the Transport Select Committee, obtained by Mr Straw.
It shows that, when a car cannot be driven away from the scene of an accident, police who arrive quickly make a call to a local garage or breakdown company.
Forces, who have agreed a fee in advance, then receive a 'tip off' or 'referral fee ranging from £5-£25.
In one year, West Midlands Police raked in an estimated £622,275 from contractors' tip-off payments, in relation to 24,891 vehicles.
Greater Manchester Police' referred' 32,855 cars to breakdown companies in 2009, but refused to reveal the amount it received, claiming disclosure could 'damage the commercial interest of third parties'.
Police claim the money is necessary to cover 'admin' fees - but not all forces choose to charge a fee.
The evidence was compiled by the insurer swiftcover.com, using Freedom of Information requests.
It approached nine forces - only two of which said they did not charge a 'referral' fee for arranging the collection of cars involved in an accident or unfit to drive after breaking down.
Based on these figures, more than three-quarters of the 54 forces in England, Scotland and Wales are likely to be pocketing a fee. The value to the police could be tens of millions of pounds.
In evidence to MPs, swiftcover said: 'When the insurer is told about the collection, it has to arrange a further collection of the vehicle from a recovery centre, owned by a third party.
'This incurs additional, unnecessary costs to the insurer and therefore policyholders.'
They say drivers should themselves call the insurance company, to avoid police getting in first.
Police say they ensure the garages agree not to pass on the details of motorists to other companies.
But claims managers say there is evidence of garages ignoring these rules, despite it being a breach of data protection law.
Incredibly, the tactics being used by the insurers themselves are legal.
Buried away in the small-print of insurance documents, motorists are asked to agree for their details to be passed on to 'relevant third parties'.
Insurers have taken this to be a green-light for them to sell the names and other personal information of a crash victims to a claims manager for £200-£1,000.
Claims firms then encourage crash victims to make compensation bids for injuries such as whiplash, even when they have not been hurt, according to the investigation by Mr Straw.
The motorist can receive a pay-out of thousands of pounds - but premiums are driven up.
Research: MP Jack Straw found insurance companies selling details
In 2009, the number of road accidents involving personal injury was 31 per cent down on the average for 1994-98.
But the cost of personal injury claims has doubled in ten years - from £7billion to £14billion - and motor insurance premiums have shot up, by at least 30 per cent in the last year.
Mr Straw wants the 'referral' fees banned. He says insurers have admitted to him that the fact they are charging 'referrals' is the industry's 'dirty secret'.
But yesterday insurers remained defiant - saying they will carry-on selling drivers' personal data until such time as a ban is imposed.
The Association of British Insurers Nick Starling, said: 'If they [insurers] stopped taking this money, everyone else would be taking it - which is why they have to be banned outright.'
Nicholas Jervis, of solicitors LoyaltyLaw.com, said: 'Finally someone has realised it is the insurance industry who have been screwing the system more than anyone else.'
The Association of Chief Police Officers said it was down to individual forces to decide how much they charged, but they were doing nothing wrong.
But Andrew Wigmore, spokesman for the Claims Council - a trade body representing 120 claims management firms - said: 'We are aware police officers, nurses, doctors, ambulance men and women have sold details of accident victims to claims management companies.'
ACPO insisted: 'We do not sell the details of people involved in accidents to compensation lawyers.'
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A few years ago a neighbour knocked my door and told me had just backed his Land Rover into my aged Renault. He asked me to get a couple of quotes for his insurance company. The damage wasn't very extensive. My garage said the dent could be knocked out and resprayed one day and allowed to dry until the next. £160, two days. The second quote was something similar. Time went by and I had heard nothing from my neighbour's insurance company so I rang up. I was told that the car would be collected and taken to their designated garage, it would take 8 days to fix and I would be provided with a hire-car for that time. If I insisted on taking it to my garage it would take a lot longer. Well, it wasn't my money or insurance so I took their offer which must have cost - what? A great deal more than £160. My neighbour didn't care either as it was a company car, insurance paid by his firm. Is it any wonder the premiums are so high?
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Remember the days you could trust a policeman. - Stuart, Coventry, 28/6/2011 0:00... No Stuart I can't.
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So basically this is a scam being run by the police, lawyers etc etc Surely this is corruption of the most disgusting kind - no wonder insurance policies are high. What an utterly corrupt place the UK has become. Is there no end to this scam, the Government should be ashamed!
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How come police are allowed to charge an admin fee? We all pay council tax don't we? The police are paid from that aren't they? Is there also an admin fee if someone gets assaulted or robbed?? The fee is an unlawful charge as the police are there on duty as public guardians and to uphold the law that's their job!
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Q: Which of the once 'Pillars of Society' can we still trust? A: Probably none.
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This country is a total disgrace, almost anything, and everything are corrupted, everyone just after one thing, monies, no matter how they get it, but when you have clueless government who havent a clue, what would you expect ? I were hoping Cameron would change this, not totally, but just enough to slow down and save a runaway train, sadly, I cant see this happening any sooner..
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