Are Insurers Cheating UK Motorists?

Image of cars on motorway during holiday season

Embargoed to 0001 Thursday, August 25 File photo dated 22/8/2014 of motorists start to queue in heavy traffic on the M25 between junction 12 and 13 near Egham, Surrey. Millions of Britons are set to go on holiday over the bank holiday weekend, tourism bosses have said.

The UK insurance industry’s reputation has been damaged by recent newspaper articles accusing it of “cheating motorists” by not passing on so-called ‘whiplash claims’ savings. A recent report in The Times newspaper suggested that “insurance companies are overcharging motorists for cover despite measures implemented by our government in April 2013 that have helped the industry to save half a billion pounds in the past three years.”

The report goes on to say; “Premiums have jumped by as much as a fifth in the past 12 months alone – adding about £115 to bills – even though a government crackdown on the no-win, no-fee industry has led to a drop in whiplash claims.”

According to reports, the Association of British Insurers (ABI) figures indicated the number of motor-related personal injury claims fell from 365,000 in 2013, to 342,000 both in 2014 and last year, while the average cost of the claims, including damages and legal fees, has fallen from a high of £11,365 three years ago to £10,738 in 2014 and £10,614 last year.

“It suggests that the overall cost to the insurance industry of these claims has dropped from more than £4.1bn in 2013 to £3.6bn last year. Motor insurance prices, however, have actually risen over the past 12 months.”

Pressure is now mounting at Westminster for insurers to explain why, after being granted an overhaul of the rules relating to whiplash claims, the huge savings are not reflected in reduced premiums for UK drivers.

Louise Ellman, chairwoman of the Commons Transport Select Committee, said of the situation: “The bottom line is that the insurance industry promised that they would reduce premiums as whiplash claims fell and, if they haven’t done it, they’ve reneged on their promise. Fraud must be wiped out but the insurance industry must also honour its promises.”

Philip Holt, head of SRB’s clinical negligence department, commented that; “It will be interesting to see how the government acts on this information, which has in fact previously been made available to the government for a quite some time by organisations such as the Law Society and the Association of Personal Injury Lawyers. Particularly in light of further proposed cuts and changes, which include further fixed fees for lawyers pursuing cases on behalf of injured clients, a proposal to raise the small claims court limit, which is an attempt by the insurance industry to remove lawyers from the equation altogether, and an equally unjust proposal to abolish damages for cervical soft tissue injuries (‘whiplash’) claims altogether”.