General Ins - Latest News - ABI comments on inquiry into cost of motor insurance

 Commenting on today's (9 September) response from the Government to the Transport Select Committee's report on the cost of motor insurance, Otto Thoresen, ABI's Director General, said:

 "Insurers are committed to keeping motor insurance competitively priced but we urgently need reform of our compensation system if motor premiums are to come down.

 "Rising claims costs from personal injury claims, excessive legal costs, insurance fraud and uninsured driving, coupled with lower investment returns in recent years, have unfortunately led to rising motor insurance bills for many customers. In fact the motor insurance sector has not been profitable for the last sixteen years because the amount paid out in claims and expenses has been greater than that received in premiums.

 "The Transport Select Committee's report was a missed opportunity as it failed to recognise that the main cause of higher premiums was our dysfunctional compensation system that encourages spurious and exaggerated personal injury claims and excessive legal costs. The Government's reform proposals must tackle these unnecessary costs. When similar reforms were introduced in Ireland, motor premiums fell by 16%"

 "To ensure young drivers are properly prepared for the roads we have long campaigned for a tougher learning to drive regime, including graduated licensing, as the best way to reduce their high accident rates. However, Government action here has fallen short of what is needed. While insurers will continue to develop products aimed at helping young drivers become safer on the roads, an overhaul of the learning to drive regime is still needed by the Government."

 Steps the industry is taking to reduce costs for customers include:

 Further reducing the scope for insurance fraud. The industry has recently set up the Insurance Fraud Register, a national database of known insurance cheats, and has funded a dedicated police national insurance fraud investigation unit within the City of London police.
 Campaigning for reform of the UK compensation system. For some time the ABI has been pushing the Government to reform the compensation system to reduce excessive legal costs and spurious and exaggerated personal injury claims. We are backed by several high street retailers, business groups and risk managers in local authorities and the NHS.
 Policies offered by some insurers specifically aimed at young drivers to help them reduce their insurance costs.

 Cost pressures impacting on motor insurance include:

 Personal injury claims. The number of bodily injury claims received by insurers rose by 72% between 2002 and 2010
 Excessive legal costs. For low value personal injury motor accident claims, for every £1 insurers pay in compensation, a further 87 pence is paid to claimant lawyers. UK consumers pay £2.7million every day to claimant lawyers through their motor insurance premiums - that is 10% of every motor premium.
 ‘Crash for cash' staged accidents and other insurance frauds, including fake whiplash claims. Last year insurers detected 40,000 fraudulent motor insurance claims worth £466 million.
 Uninsured driving. The cost of compensating the victims of accidents involving uninsured drivers is £500 million a year, paid for by honest motorists through their insurance premiums.

Back to Index

Similar News to this Story

Insurers face margin crush if premiums cannot be hiked
A sustainable margin recovery looks increasingly challenging for European insurers, according to new analysis by Bloomberg Intelligence, with premiums
Cost of living crisis has millions taking on a second job
One job is not enough for 5.2 million UK workers as the cost of living crisis continues to bite, with a further 10 million workers considering taking
Insurers warned do not be behind the curve on climate change
A new report from LCP highlights risks relating to climate change are not being sufficiently prioritised by many insurers, despite new reporting regul

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS


Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.