Confused.com calls for fight on root causes of premium increases

Confused.com has backed the findings of the Transport Select Committee’s report into the rising cost of motor insurance and has called for a cap on referral fees.

The car insurance comparison website, which provided evidence to the inquiry in November, has called for issues of fraud, raised penalties for uninsured drivers, better education and support for young drivers and better data sharing to be implemented in order to help tackle the root cause of insurance premium rises.

Gareth Kloet, head of car insurance at Confused.com, said:

“During 2010 the average fully comprehensive car insurance premium rose by 38.2%, and now stands at £695. Unless measures are taken premiums will continue to rise and more motorists may be tempted drive uninsured, underinsured or make fraudulent claims in an attempt to save money, which will only serve to increase premiums further.

“We fully support the idea of having a dedicated police unit that will help tackle insurance fraud, one of the major causes of the sharp rise in premiums. Cash for crash schemes are not only dangerous but cost honest motorists as they ultimately foot the bill for these ‘accidents’. Confused.com firmly believes that improving data sharing between the DVLA and insurers will also help reduce instances of fraud.

He called for an increase in transparency around referral fees and payments in the event of a claim. “We would also argue that a structure for compensation claims and a set limit on legal fees be implemented, as per the Lord Jackson review,” he said.

Kloet added that15% of young drivers currently cause 31% of all accidents.

“These accidents lead to 40% of all motor insurance claims, so implementing measures to reduce fatalities and serious injuries amongst this group is essential," he said. He said it was especially important given the recent EU gender ruling which will see young women’s premiums rise to the same level as young men’s.

“Making the driving test harder, re-assessing the pass plus scheme or getting insurers to offer discounts for those who have had additional training and increasing the use of telematics devices should all be investigated."

Confused. com pointed out that the penalty for being caught driving uninsured is a maximum £1,000 with an actual average fine of £200.

“We join the calls made by the select committee for action to be taken, starting with a full consultation and timetable for change. It’s high time we started tackling the root causes instead of talking about the implications,” said Kloet.