Insurers back for more whiplash reform after premiums fall

This article was published on: 01/30/14

Association of British Insurers (ABI) logo

The insurance industry has rediscovered their appetite for whiplash reform after revealing that the price of motor insurance premiums had dropped over the past year.

The ABI confirmed on Tuesday that the cost of the average motor insurance policy dropped 9% on the previous year and claimed that this represented a need for the government to continue the reform agenda.

However, what wasn’t stated was that the reported figures were based on data from the ABI, who make up 90% of the motor insurance market.

Speaking about the findings, the ABI’s head of motor insurance, James Dalton said: “The 9% fall in the average comprehensive motor premium last year shows that insurers are fulfilling the commitment they made to the government to pass savings from changes to the civil litigation system to hard pressed motorists through lower car premiums.

“But more can be done to get premiums even lower, which is why the government needs to press ahead with tackling exaggerated and fraudulent whiplash claims, which honest motorists are sick of paying for through their insurance premiums.”

Was he talking about the plans to begin setting up independent medical panels?

No he was not. What the insurance sector really want are more reforms to the small claims court and in particular to the small claims limit, which they want increased so that legal representation is effectively removed from the claims process altogether.

Of course as we all learned last year, the insurance industry is certainly not averse to presenting inaccurate or misleading figures to get their way.

The most notable example of this was at the Transport Select Committee’s whiplash inquiry, where it was proved they were using dated figures to emphasise their claims and as a result this played a huge part in bringing a halt to further whiplash reform.

The revelations of the Competition Commission should also not be ignored, as the industry was exposed for bad practices,  which the Commission claimed was the real reason premiums had increased in the previous year.

Tuesday also saw the release of figures showing that since the introduction of the Jackson reforms, the number of new claims being made had fallen by 11.5%, compared with the same period in 2012.

This will provide ammunition in defence for the claimant lobby and could suggest that the drop in premium prices is completely unrelated to the cuts to legal costs imposed as part of the Jackson Reforms.

In fact it could be argued that because of the overall amount of claims reducing, the cost premiums were likely to fall anyway regardless of whether the legal costs hadn’t been altered and that insurance industry are once again looking after their own profits by denying the ‘hard pressed’ motorist the full decrease in premium price.

The government has up to this point ruled out any further reforms to the small claims limit but they did state, at the conclusion of last years consultation, that it could be looked at again further down the line.

Surely they can’t be fooled by the insurers again.

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1. ABI;