Curse that Cap’n Jack Straw! All this hoo-ha over referral fees is threatening to scupper the Admiral’s formerly formidable (but apparently quite unstable when you look at it closely in the current climate) motor insurance business model, the Daily Telegraph revealed this week.

A quick sift through Admiral’s statutory reporting reveals that more than half the firm’s UK motor insurance profits come from something called “ancillary sales.” Investec analyst Kevin Ryan told the Telegraph that a lot of these mysterious ancillary sales are referral (or “acceptance”) fees, describing Admiral’s business model as “a complex balancing act.”

Shore capital’s Eamonn Flanagan was more direct: “The apparent lack of impact on Admiral’s combined ratio of a near epidemic in bodily injury claims, has left many in the insurance industry somewhat incredulous over the group’s seeming ability to walk on water,” he told reporter Jamie Dunkley.

An Admiral crew person attempted to bore the Telegraph off the story as follows: “When one of our customers calls us for help with a claim that was not their fault, we refer them on to a retained accident management company who help sort out their claim, but only if they give us their permission. If they don’t want to be passed through to our accident management company we do not put them through. If the claim needs to be referred to a lawyer then the accident management company will pay us a referral fee.”

Sounds pretty innocuous, doesn’t it?

Or at least it would have done before the world woke up to the evil of referral fees and the government started talking about maybe doing something about them.


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