The Institute of Actuaries announced on Tuesday that throughout 2013/14 the number of third party claims being made has dropped by 10%, which of course is great news.
But off the back this news insurer based propaganda is beginning to rear its ugly head as it becomes apparent that in line with this insurance premiums were also decreased by 19%, something they claim is a direct reaction to the decrease in claims.
In reality, this is not the case. Although there may be some truth in insurance companies dropping the cost of their premiums in anticipation for falls in the numbers of claims after the introduction of LASPO, it appears there is more to this than meets the eye.
Indeed the AA has put the decrease in premiums down to ‘competitive tensions’ from within the car insurance industry and insisted that the reductions in car insurance premiums has come to end, according to figures that state there has been a 4.2% increase to the market average premium.
With major insurance companies such as Aviva quick to cover themselves in glory following the release of the Institute of Actuaries report, this will come as a neutraliser to their inevitable propaganda campaign to bring in more reform.
Aviva has come out and said that they now win three out of four cases for their customers and claims to be winning the war on spurious and fraudulent claims within the industry.
Yet this is the same company who has admitted in the past that out of the number of claims that they fought, just 2% were in fact of a spurious nature, so whereas it is good news that in for the public that they are saving up to £50 million for their customers, perhaps it would be more beneficial for consumers to think about how much was wasted fighting against the 98% of claims that weren’t spurious to gain a little perspective.
The managing director of AA Insurance, Janet Connor was certainly quick to play down the role of the reforms within the industry. She said: “Premiums had been reduced partly because insurers had anticipated a decline in fraudulent personal injury claims due to reforms promised by the Ministry of Justice in its Legal Aid, Sentencing and Punishment of Offenders Legislation.”
“The truth is, falling premiums had more to do with the competitive tension than any benefit afforded by reforms. Premiums are, on average, now similar to their 2010 level and are no longer economically sustainable.”
The bravado of the insurers in regards to their premium cuts is simply another attempt to sugarcoat the truth and that is that they are still not doing enough to pay back the money saved from claims into the consumers’ pockets, which begs the question where is the money raised from the 33% drop in the cost of claims going?
In regards to the decrease in the number of third party claims well this will largely be attributable to the fall in claims management companies now operating within the legal industry, which has been cut by 35% since 2013.
The Government’s campaign to stamp out those acting in an unethical way to bring in new claims via unsolicited methods has worked tremendously and will no doubt say more for their battle to decrease the level of fraud within the industry than the outcomes of the LASPO Act.
But to put this decrease into a wide perspective, it could stand for something a little less positive. Has the number dropped because people now feel that claiming for their perfectly legitimate injuries is wrong?
The cut to fees for legal representation, particularly in the small claims court, has seen many firms change their specialities or simply cease to exist, so is the drop down to limited choice for the genuine claimant.
As Aviva themselves said, only a very small percentage of claims were in fact spurious. So the question is has LASPO actually driven out the majority who deserve compensation for their injuries instead of trapping the minority that make fraudulent claims?
David Brown, chairman of the working party who carried out the research, recognised the impact of the Government’s legislation, but at the same time ruled out that it was possible to make an accurate assessment of the reforms,
He said: “Legal Changes in 2013, most significantly the Legal Aid, Sentencing and Punishment Offenders Act – known as LASPO – appear to have had a significant impact on motor insurance injury claims.”
“However, we remain uncertain as to what the final impact of these changes will be, as well as that of other legal changes, such as the upcoming whiplash reforms.”
Scott Rees and Co Partner, David Byrne, summed up what the findings of the Institute of Actuaries represent by saying: “If the drop in claims was a true representation of the removal of fraud from the industry then this is great news.”
“But by Aviva’s admission that they are now winning three out of four cases, they challenge for their customers, in spite of their earlier revelation that only 2% of claims were actually spurious, then this represents something far more worrying.”
“Yes, it is true that these figures are a reflection of the impact of LASPO but not necessarily the positive one that the insurers and the Government for that matter will have people believe.”
“What it shows, in correlation with what Aviva are celebrating, is that people are possibly finding it harder to get the quality representation they used to, resulting in more defendant challenges being successful.”
“These reforms, along with the referral fee ban, were supposed to even the balance, but what we are potentially seeing is a swing in the favour of the defendant.”
“This is obviously not a good thing as it is important to remember that the only reason a claim for compensation is submitted in the first place is down to the negligent defendant.”