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Insurers driving down unnecessary motor insurance costs

Responding to today’s report from the Transport Committee on the Government’s plans to tackle motor insurance fraud, James Dalton, the ABI’s Head of Motor Insurance, said:

“Motor insurers are determined to drive out unnecessary costs to ensure that customers get the best motor insurance deal. We are pleased the Transport Committee recognise that average motor premiums have been falling – the ABI’s premium tracker shows premiums have reduced 14% since early 2012. This reflects the industry passing on savings to consumers resulting from reforms introduced to address fraudulent whiplash claims. Recent announcements to tackle grossly exaggerated claims and stop solicitors offering free ipads or cash for whiplash injuries are further welcome developments.  

“A medical report for a minor injury claim produced years after a car accident adds no value whatsoever. Removing an insurer’s ability to settle a claim without a medical report will only serve to increase insurers’ claims costs, and consequently premiums.

“More needs to be done to sustain lower motor insurance premiums. The Government needs to press ahead with the delivery of a nationwide panel of independent and accredited experts producing medical reports in support of whiplash claims; ensure that the small claims track limit is increased to £5000, and ask whether general damages should be awarded for whiplash injuries at all.”

On specific issues highlighted by the report:

  • We have long argued that the small claims track limit needs to increase to £5000. The current limit of £1000 was set in 1991 when 50% of personal injury claims were within the threshold, now only 9% of claims are.
  • Insurers recognise the value of sharing data to help identify potential frauds and are continue to work with claimant representatives to see how this could best be achieved in practice.
  • Since it became operational in January 2012, the Insurance Fraud Enforcement Department (IFED), a specialist insurance fraud police unit, has made 510 arrests and secured 93 convictions in court. In March, the industry agreed to invest a further £11.7m to extend the IFED contract until the end of 2017, bringing the industry’s total investment to more than £20 million.

Last updated 01/07/2016