Be warned, UK motor insurers will probably only cut premiums slowly as a result of the government’s latest proposals for whiplash claims, according to rating agency, Fitch.
Last week, George Osborne announced the Government’s intentions to increase the small claims limit from £1,000 to £5,000, as well as banning all compensation awards for whiplash victims, in exchange for treatment and rehabilitation, in a bid to save the insurers £1bn per year and free up extra savings to put towards reducing motor insurance premiums.
But Fitch has warned motorists not to expect this to happen quickly, highlighting that the insurers will more than likely opt for a cautious approach, in order to protect their underwriting profitability and it is this point that underlines what the reforms would really be about.
This is nothing to do with saving the UK motorist money on their insurance premiums, it is nothing more than a profit building and protection exercise by the insurers.
At £1bn savings, the British motorist could expect to see their premiums reduced by £40-£50 a year but in reality this is still uncertain and Fitch have stated how they remain unconvinced that this level of savings could actually be achieve.
Fitch’s report stated: “The last time the government tried to address the rapid growth in personal injury claims, by outlawing claim referral fees and preventing the recovery of success fees, insurer slashed premiums by nearly a quarter in 2012 and 2013.”
“The price drops were partly driven by the industry’s over-optimistic forecasts for lower claims and meant the accident year combined ration, a measure of claims to premiums, climbed steadily from 103% to 112% in 2014”
For the insurers there tactics have been long driven towards bringing an end to legal representation for small injury claims and it would seem that, as things stand, the Government are ready to facilitate this.
The removal of compensation for soft tissue injury victims, will come at a cost for the genuine victim, who will be forced to cover the cost of their own loss of earnings, should they be unfortunate enough to get injured.
Meanwhile, the increase of the small claims limit is unthinkable and will force thousands of people down the line of having to act for themselves as a litigant in person or they will have to deal with the insurers directly and face the very real prospect of not receiving the level of compensation they are entitled and need for their injury.
Many of those who have not been injured before and so not needed this legal representation may wonder how this will affect them. Well the implications of these proposals will see mass cuts to jobs within the legal profession and not just for the solicitors and lawyers themselves, but also their suppliers, medical experts and judges.
Of course the increase in people being out of work will mean more people applying for Job Seekers Allowance and this, as well as lower CRU recovery, loss of VAT, PAYE, income and corporation tax, stemming from the closure of law firms up and down the country, will cost the Treasure £1bn alone.
Yes a cost of £1bn, which of course will have to be made up form somewhere and with motorists now being drip fed savings because of the Governments newly proposed policies, guess who will be forced to make that deficit off.
Since the Autumn Statement, a petition has been set up and so far 17,749 people have signed, which means the Government will be forced to respond but much more needs to be done and you can help by clicking the link below.
Click here to Sign the Petition to Save Your Access to Justice