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    ABI News Release

    Tuesday, 10 December 2002 Ref: 117/02

    OFT Study into liability insurance must recognise the impact of increasing claims costs says the ABI

    OFT STUDY INTO LIABILITY INSURANCE MUST RECOGNISE THE IMPACT OF INCREASING CLAIMS COSTS SAYS ABI

     (364 words)

    The ABI (Association of British Insurers) will be urging the Office of Fair Trading (OFT), in its study into the UK liability insurance market announced today, to recognise the impact which rising compensation claims and legal fees are having on insurers and their customers. 

    Mary Francis, the ABI’s Director General, said:

    “ The cost of liability insurance has risen because we live in a riskier and more litigious society. Any inquiry is welcome, so long as it addresses the fundamental causes, not just the symptoms.

    “ The cost of personal injury claims paid for through employers’ liability insurance has risen by 100% in the last five years. Moreover, legal fees now account for 40% of insurers’ claims costs: they need to be reduced.

    “ The ABI will be contributing fully to the OFT study to ensure that the problems of rising costs and the unacceptable level of legal fees are tackled. We need a radical re- think ”.

    Legal changes in the last three years, such as ‘no-win, no-fee’ arrangements, reductions in the discount rate for calculating damages, and personal injury award inflation, contributed to the UK liability insurance sector recording an underwriting loss of £565 million in 2001. In 2001, for every £1 premium received, insurers paid out in claims and associated expenses £1.30. “       

    - ENDS -


    Note for Editors

    1 Enquiries to:   Malcolm Tarling      020 7216   7410 ( mobile 07776 147667 )
                                      Alan Leaman           020 7216   7440
                                      Leonie Edwards      020 7216   7411
                                      Emma Grainge        020 7216   7392

    2 Recent research carried out for the ABI by Greenstreet Berman on employers’
    liability insurance highlighted that:
    - Employers’ liability insurance costs make up 20% of the total cost of the workplace compensation bill of £6.7 billion. This proportion is set to rise to nearly 60% by 2015.
    - The average cost of an EL compensation claim has risen by 20% per year since 1997.

    3 An ISDN line is available for broadcasts.

     

     

     

    117/02

    Copies of all ABI news releases, together with other information from the Association, can be seen on our website http://www.abi.org.uk

     



    Notes