Innocent people who have been injured in road accidents are being sent what appears to be a standard 'intimidating' letter containing statements about fraud by a company acting for an offshore car insurer.

The practice has been highlighted by an accident victim who was warned in a three page letter from Eldon Insurance Services that arrived out of the blue and bypassed his appointed solicitors that “fraud can be punishable by a prison sentence” when they had no basis for thinking his claim was anything other than genuine.

Jerry Lehane, who passed the letter to Thompsons Solicitors, says Eldon have “made him feel like a criminal” and is concerned other people receiving the apparently standard letter “might not know what to do”.

Mr Lehane is making a claim for injuries suffered in a road accident in Notting Hill, London in 2012 for which Eldon, representing Gibraltar-based Southern Rock Insurance, has already paid for vehicle damage.

“This is car insurers becoming so convinced by their own rhetoric about fraud - for which they have no truly independent back up - that they bandy accusations around with no regard as to proof or evidence,” said Tom Jones, head of policy at Thompsons.

“The letter to Mr Lehane is worded in an intimidating fashion that suggests everyone is guilty until proven innocent. It asks questions they should have known the answer to and, if they had suspicions about fraud, they should have put that to us as his lawyers.

“It would be bad enough if this was an isolated case, but the letter appears to be standard because in one place the person processing it has left the words ‘name of solicitor’ in brackets.”

As well as saying fraud is punishable by prison, the letter tells Mr Lehane that his personal data will be passed to the Government, fraud detection bodies and other insurers and queries whether or not he had instructed Thompsons and how he came to do so.

“The letter made me feel like a criminal,” Mr Lehane said. “My lawyers had contacted Eldon yet they by-passed them and came straight to me. When I read the letter, I knew it wasn’t something I could deal with by myself.

“I had Thompsons there to support me but other people might not know what to do and could feel as if someone was trying to catch them out. The wording was threatening.”

The Lehane case comes as a Government ‘fraud task force’ dominated by the insurance industry is looking at further restrictions on the rights of motorists to obtain legal advice when they have had an accident.

The insurance industry claims that fraud is costing the industry billions, but this is at odds with evidence from the published accounts of the handful of insurers that make their trading figures public. Market leaders Direct Line and Admiral made profits of more than £800m in 2014 from this captive market, but other car insurers do not divulge the relevant financial information.

Both Eldon Insurance Services Ltd, which is a private UK-based company, and Southern Rock are part of an Isle of Man-centred group of companies controlled by insurance multi-millionaire Arron Banks. Access to information about the companies is very limited.

“If car insurers aren’t willing to be transparent about their finances, they can’t expect us to accept their claims about fraud,” said Tom Jones.

“At the moment, what we see is contradictory. On the one hand, public companies such as Direct Line and Admiral are telling their shareholders that the claims environment is so good they can afford to pay ever more in dividends. On the other hand, industry lobbyists are still complaining that fraud is costing billions and we now know they are prepared to go round the back door to make our clients feel threatened when there is a proper channel to deal with this and they have nothing to suggest fraud exists.

“Transparency is the key to consumer protection. We believe that one regulator, the Financial Conduct Authority, should be given lead responsibility for the £26 billion UK car insurance market and have the powers and resources to be able to properly protect consumers and demand transparency. At present it’s a one-way street with insurers making demands of policy-makers with little or no accountability in return.

“No independent evidence has ever been produced to show the scale of fraud - all the figures come from the industry itself - and yet on the back of those self-serving statistics there has already been radical restrictions on access to justice for injured people under the Tory-Lib Dem government and more will almost certainly be recommended by this taskforce. Policy is being made based on scare stories not facts – that’s why we need transparency.”

Thompsons has written to Eldon posing a series of questions but has so far received only what appears to be another standard letter in reply. The firm also intends to refer the issue to the Behaviour Committee of Claims Portal Ltd.


  • In response to questions from the all-party Transport Select Committee, the Government and the insurance industry have retreated from their claims about the level of motor insurance fraud. They both now admit their figures do not provide “anything more than an indication” of the level of fraud. The Association of British Insurers said it even included cases where a ‘handler’ who suspected fraud had asked for further information and the claimant had either failed to provide it, withdrawn their claim or accepted a reduced settlement.
  • The two leading car insurers, Direct Line and Admiral, have between them paid out £1.66 billion in dividends in the last three years – equivalent to £221 for each of their seven million-plus policy holders. The other market leaders, AVIVA and AXA, have refused to reveal how much profit they make from British motorists.
  • According to its 2013 accounts, Eldon Insurance Services is owned by Isle of Man-based ICS Risk Solutions, which is controlled by Arron Banks. The shareholders in Gibraltar-based Southern Rock Insurance are Banks and Banks-controlled Rock Holdings and Southern Rock Holdings. Banks and his companies are big UKIP supporters. Last year, Banks personally gave the party £100,000 while Rock Services Ltd, a subsidiary of Isle of Man-based Rock Holdings, donated £394,254.
  • Seven regulators currently have some involvement in the car insurance market but none of them has the power to enforce transparency or consistent standards of behaviour towards consumers. Thompsons believes the Financial Conduct Authority should be given lead responsibility for car insurance and be given adequate powers and resources to make the industry accountable.