The claims management market in the U.K. has seen a significant growth with an estimated fifteen hundred companies engaging in personal injury referral work. The total size of the market is approaching £300 million, which is small in comparison to the number of firms which engage in personal injury referrals.
These figures suggest that there are a few major players in the market but that there is sufficient room for other smaller players who can still make significant returns.
There are a number of reasons for the growth in the number of claims management companies:
1. Consumer awareness:
Since the introduction of the Conditional Fee Agreement (CFA) the pioneering claims management companies went to considerable lengths to advertise people’s ability to claim compensation for personal injury. Over this period other companies have matched entered and bolstered their share of the marketing, contributing to the total marketing spend and increasing consumer awareness. Claims Management Company, Accidents Direct, was founded in 2002 and is now one of the biggest online spenders referring over one thousand personal injury enquires each month. Because of this year on year increase in marketing spend, consumers are more aware of their rights which has meant more work for claims management companies.
2. The Recession:
The Credit Crunch and subsequent recession has meant many entrepreneurs have seen personal injury referral work as a stable income in a volatile economic market. Personal injury work is largely unaffected by the activities of the banking sector, not relying on consumer purchases to bolster income. The service is, on a whole, completely free to the consumer and accidents will always occur despite the economy. There is therefore a constant stream of work for existing and new businesses to take advantage of.
3. The Compensation Act 2006
Official regulation has helped improve the reputation of the industry. Firms engaged in referral work are able to operate within clear guidelines, providing a structure to the business model while ensuring the consumer is protected form companies operating in unscrupulous activities.
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