Insurers face whiplash backlash

Insurers have denied overcharging motorists after an article in The Times accused them of “cheating” motor customers by failing to pass on claims savings from government whiplash reforms.

On the cover of its August 27 edition, The Times said that insurers had increased motor rates by a fifth in the past 12 months despite benefiting from savings of £520m from the government whiplash reforms.

Car insurance premiums rose 19.2% in the second quarter of 2016 compared to the same period last year, according to Confused.com/Willis Towers Watson car insurance price index.

The Times article quoted the Association of Personal Injury Lawyers vice-president Brett Dixon as saying the insurance industry “cannot keep premiums under control”.

But insurers have hit back, arguing that personal injury claims costs are just one of several factors that influence motor insurance prices.

An AXA spokesperson said: “The cost of motor insurance is not solely due to whiplash claims. The rising cost of vehicle repairs – owning to more complex, technologically advanced cars – and an increase in the number of uninsured vehicles on the road both play a part.

“The cost of motor insurance will only begin falling significantly when the cost and volume of claims falls significantly too.”

Damage claims rise

The Times cited ABI numbers showing that motor-related personal injury claims have gone down from 365,000 in 2013 to 342,000 in 2014 and 2015, and that the overall cost of these claims fell from over £4.1bn in 2013 to £3.6bn last year.

But the ABI noted that there has been a recent increase in other types of motor claims such as property damage and accidental damage. The average cost of a property damage claim rose from £1,990 in 2013 to £2,136 in 2015.

An Aviva spokesperson said: “The current system for motor insurance incentives crash for cash whiplash scams and nuisance calls; it lines the pockets of lawyers, claims management companies and organised fraudsters, raising the cost of insurance for honest motorists.”

“The choice ahead is to tolerate the status quo or see off compensation culture and all its trimmings, and cut the cost of motor insurance for us all.“

Legal blame

The ABI also said legal firms who pursue speculative injury claims were a big part of the problem.

ABI general insurance policy director James Dalton said: “The only people cheating motorists are those legal firms who continue to encourage speculative personal injury claims.

“The industry remains committed to ensuring that motorists get the best deals possible from a very competitive motor insurance market.”

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Laspo) reforms were introduced in April 2013 to cut costs of motor claims.

In the first seven months the registered claims fell by 6.3% but they have since gone up again.

Claimant firm Carpenters Law partner Donna Scully said there needs to be a question about whether these types of reforms are positive.

Scully said: “The whole issue is about why we are doing these reforms and how we will be able to check that they are effective.

“There is an incentive there for claims management companies to push bad claims. And that is going to be bad for consumers.”