Responding to the publication today (11 March) of the House of Commons Transport Committee report into the cost of motor insurance, Nick Starling, Director of General Insurance and Health at the ABI, said:

“This report is a missed opportunity. The Committee took a great deal of evidence, and has chosen to ignore much of it.

“The Committee has failed to recognise that the main cause of the recent increases in motor insurance premiums is ever- increasing personal injury claims and spiralling legal costs. These are often driven by claims management firms. The Committee should have called on the Government to implement in full the recommendations of Lord Justice Jackson’s report into tackling the compensation culture. This will not only control excessive legal costs, but will speed up the payment of compensation to genuine claimants. Until this happens the cost of motor insurance will continue to rise.

“Legal costs alone now add an extra £40 a year to the average motor premium, and motorists should not have to foot the bill for our cost-ridden compensation system.

“The Committee is also wrong to say that referral fees should be more transparent. They are a symptom of a dysfunctional compensation system, not the cause of it. This is why the industry wants to go further than the Committee recommends and ban them altogether.”


On the Committee’s comments on tackling insurance fraud and young driver road casualties, Nick Starling commented:

“Insurers are also working hard to combat insurance fraud, including funding the Insurance Fraud Bureau, which works closely with the police in investigating organised motor insurance frauds.

“What the Committee has got right is to call for more action to reduce the appalling number of accident casualties among young drivers. The Government must act now to fix our failing driver training regime, through measures such as introducing a minimum learning period.”


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Notes

Notes for Editors

1. Enquiries to:
Liz Forster            020 7216 7444 (Mobile: 07717 578 586)
Malcolm Tarling     020 7216 7410 (Mobile: 07776 147 667)
Erfan Hussain        020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler-Coyle  020 7216 7415 (Mobile: 07968 364 302)


2. The ABI is the voice of the UK’s insurance, investment and long-term savings industry. It has over 300 members, which together account for around 90% of premiums in the UK domestic market.
The ABI’s role is to:
- Be the voice of the UK insurance industry, leading debate and speaking up for insurers.
- Represent the UK insurance industry to government, regulators and policy makers in the UK, EU and internationally, driving effective public policy and regulation.
- Advocate high standards of customer service within the industry and provide useful information to the public about insurance.
- Promote the benefits of insurance to the government, regulators, policy makers and the public.

The UK insurance industry is the third largest in the world and the largest in Europe. It is a vital part of the UK economy, managing investments amounting to 24% of the UK’s net worth and contributing the fourth highest corporation tax of any sector. Employing over 275,000 people in the UK alone, the insurance industry is also one of this country’s major exporters, with a fifth of its net premium income coming from overseas business.
Insurance and businesses protect themselves against the everyday risks they face, enabling people to own their own homes, travel overseas, provide for a financially secure future and run businesses. Insurance underpins a healthy and prosperous society, enabling businesses and individuals to thrive, safe in the knowledge that problems can be handled and risks carefully managed. Every day, our members pay out £155 million in benefits to pensioners and long-term savers as well as £58 million in general insurance claims.

3. An ISDN line is available for broadcasts.

4. More news and information from the ABI is available on our web site, www.abi.org.uk.