Motor insurers ‘reluctant’ to pass on whiplash savings

This article was published on: 09/20/16

If the Government needed a big enough reason to draw a line over proposed whiplash reforms, there should be no greater than this headline.

New figures, released by leading credit agency, Fitch Ratings,  show that no savings from the whiplash reforms are likely to be passed on for at least two years, even if the government implement their proposals for further reform.

Proposed savings

In November 2015, the Association of British Insurers’ (ABI) director general, Huw Evans, promised a highly competitive motor insurance market and that leading UK insurance firms would continue to “pass on” savings made from the government’s whiplash reforms.

However the findings by Fitch suggests an entirely different outlook for the profession and reveals that only two companies have made any sort of commitment to these proposals.

The reason for insurers failing to pass on savings is revealed to be because the levels of reserve releases that have supported the insurers; profitability in recent years are unsustainable in the long term, confirming what we already knew about the insurance industry’s motives for reforms.

With a consultation to discuss the reforms put forward by George Osborne in last year’s autumn statement, due in the coming weeks, it is hoped that these findings might help to sway the government away from introducing them.

The proposed reforms, which include increasing the small claims limit from £1,000 to £5,000, would make representing clients with injuries of this value, financially unviable for personal injury solicitors and therefore deny tens of thousands of genuine accident victims the access to justice they should be entitled to.

The Ministry of Justice claimed that the proposed reforms would save the motorist up to £50 a year on their premiums. With the latest revelations, however, this claim would seem to be in disrepute and should surely be enough to deter the Government form moving forward with their plans.

Restricting legal aid

The reforms are an attempt to banish fraudulent claims using what is very much a scattergun approach. By ensuring no injury under £5,000 is represented and whiplash victims only receive care based compensation, the government will effectively deny those who are legitimately injured the damages they are entitled to and need in order for them to recover without financial strain.

Legal assistance should never be restricted. The ‘no win no fee’ method allows people from all backgrounds the right to have legal representation without the risk of entering thousands of pounds worth of debt.

While the insurance industry believes the reforms will save money and combat fraud, solicitors are concerned the reforms do not target fraud at the correct level, punishing the many, for the actions of a few.

With insurers apparently concerned that whiplash claims were crippling the industry, it was surprising to see top firms like AXA increase their revenues by 25%.

Join the fight

Help protect your right to access to justice today by joining us, alongside the rest of the legal community, and get involved with the “Access to Justice Action Group”.

Set up by solicitors to challenge the reforms, Access to Justice gives tips and suggestions on how the general public can help our cause and continue to be represented and combating fraud in a much better targeted fashion.

Currently the reforms have not been implemented, so if you have suffered any injury at work, on the road or in any public place, you can still receive justice using the ‘no win no fee’ system.

For more information you can call Scott Rees & Co on 01695 722 222 (lines are open weekdays from 9am to 7pm) or you can use our claim page on the website to get started right away.

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