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Insurers passing savings from motor reforms customers pace change has stalled warns the ABI

Reforms to drive down the cost of motor insurance for young drivers need to be kick started says the ABI.

Despite insurers passing on cost savings to motorists from reforms to the civil justice system introduced over the past couple of years, measures to improve young driver road safety have stalled which has meant that premiums for young drivers have remained high.

Three years on from the Prime Ministerial motor insurance ‘summit’ between the insurance industry and Government, where action was agreed to improve road safety for young drivers and tackle exaggerated and fraudulent whiplash claims, UK motorists have benefitted from:

  • Lower average premiums. Since quarter 2, 2012 the average comprehensive motor insurance premium paid has fallen by 10% to £372. Reforms to the civil justice system introduced in April 2013 have stripped out excessive legal costs and have enabled insurers to pass on total savings of nearly £600 million in lower premiums to customers.
  • Cracking down on frivolous and exaggerated whiplash claims. The insurance industry has been working closely with Government and other stakeholders in the development of MedCo, which will be responsible for randomly allocating independent medical experts to conduct examinations for whiplash claims.

However, much needed reforms have stalled in a number of key areas:

  • Young driver reforms. Despite calls from road safety groups, and over whelming international evidence, the Government has failed to introduce much needed reforms aimed at reducing the unacceptably high number of serious road crashes involving young drivers. With 17-19 year olds making up 1.5% of all licence holders yet involved in 12% of fatal or serous road crashes, introducing a much needed graduated driving licencing regime, will not only improve road safety, but lead to lower premiums.
  • Increasing the Small Claims Track limit  from £1,000 to £5,000 for low value RTA claims. The small claims track, with the appropriate safeguards put in place is a cost-effective, simple and speedy way of settling lower value personal injury claims which will help to lead to reduced premiums.
  • A crack down on rogue Claims Management Companies (CMCs). Although the powers of the CMC regulator have recently been increased, more can be down to clamp down on the unscrupulous CMC involved in nuisance calls and bringing forward frivolous claims

James Dalton, the ABI’s Director of General Insurance Policy, said:

"Three years on from the Prime Ministerial summit, insurers continue to deliver on their commitment to pass on costs savings to consumers following reforms to the civil justice system. While good progress has been made, more can be done to strip out unnecessary costs from the market and help bring down car insurance premiums, particularly for young drivers. Increasing the Small Claims Track limit is a potential quick win and would reduce premiums./p>

"And the Government’s continued failure to make meaningful changes to improve young driver testing and training is not only putting their lives at risk, but keeping the costs of motor insurance for young drivers unnecessarily high."

To read more, see James Dalton's blog: Valentine’s Day at Downing Street – three years on

Last updated 01/07/2016