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Culture of personal injury claims threatens to hit company car insurance
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A PLAGUE of personal injury claims is threatening to hit businesses running company cars with the knock-on effect of increased insurance premiums according to analysis by the AA.

For while the motoring organisation noted that a typical annual comprehensive car insurance policy fell over the first three months of this year, it expects this drop to be reversed aided by an on-going personal injury claim culture.

Recent research by the AA showed that 11% of motorists say they see nothing wrong in making a claim for compensation in the event of a no-fault collision even if no injury is suffered.  Connor says this culture is encouraged by cold-calls from claims management firms.

Insurance premiums bound to rise

  • Shoparound average premium falls by a fiver over first quarter of 2015;
  • “Low premiums can’t last”, says AA;
  • Insurer’s use first quarter to gain market share;
  • Many insurers still paying out more than they receive in premiums;
  • Personal injury claims are biggest threat to low rates.

“Despite the premium falls over the past couple of years, the cost of cover remains higher in the UK than in most other European countries, thanks to the claims culture in the UK,” Janet said Janet Connor, managing director of AA Insurance.  “While the number of crashes on Britain’s roads has fallen, the number of injury claims has risen.

“It’s time consumers understood the connection between premiums and making fraudulent claims.  Car insurance is there to protect drivers in the event of a crash, not as an opportunity to cash in.  Insurance isn’t a savings account.

“My greatest fear is that if insurance fraud such as whiplash injury claims isn’t brought under control and quickly, we will see a repeat of the spiralling premiums of 2010 and 2011 when the cost of the average policy rose by over 40% in just 12 months.”

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The latest benchmark AA British Insurance Premium Index, which has shown the average Shoparound quote, which uses both direct/broker and comparison site prices, fell by 1% or £5.58, to £530.47.

That compares with a rise of just 0.2% over the last quarter of 2014, and a rise of 1.2% over the three months ending 30 September.  Over 12 months, premiums have fallen by 5.8%.

But the AA says first quarter drops in premiums are not uncommon in a competitive insurance market

Connor explained that insurers are offering price reductions to build market share at a time when, with the new motor registrations, more policies are sold than at other times.

That means the brakes are now coming and premiums are starting to rise and will continue to do so over the rest of 2015. This is already beginning to happen among older drivers.

Culture of personal injury claims threatens to hit company car insurance

She said: “We’re starting to see insurers quoting higher prices and I think that’s the beginning of a trend, but market remains very competitive. Bur the rate of increase isn’t going to be turbo-charged.”

Connor points out that for many insurers, the cost of claims is greater than premium income, which means that present prices are simply unsustainable.

Yet she is hoping that new medical reporting accreditation for whiplash injury assessment will help to curb the out-of-control claims that are now leading insurers to increase premiums.

She said: “I hope this will put off those looking for an easy cash win but not discourage those with a genuine injury.”

Insurance winners and losers by region

The only region to see an average premium increase is Wales, with an average premium of £484.14, up by about £6 or 1.3%.

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The biggest fall was in Northern Ireland where premiums fell by 4.5% to £756.58, swapping places with the northwest of England which is now the most costly region to insure a car with an average quoted premium of £768.97, down 1.2%.

Scotland continues to be cheapest region in the UK for car premiums and has seen a fall in premium of just 17p.

Shoparound by region

Region2014-Q42015-Q1Change2014-Q1Annual
Anglia£500.94£496.50-0.9%£496.50-5.6%
Border & TyneTees£511.72£506.66-1.0%£506.66-7.9%
Central£544.39£537.66-1.2%£537.66-6.9%
Granada  (North-West)£787.18£768.97-2.3%£768.97-9.1%
London£643.01£638.98-0.6%£638.98-4.1%
Scotland£373.86£373.69-0.0%£373.69-5.0%
South£448.76£445.33-0.8%£445.33-5.0%
Ulster£792.06£756.58-4.5%£756.58-6.5%
Wales£477.75£484.14+1.3%£484.14-1.1%
West & West Country£424.64£422.03-0.6%£422.03-4.3%
Yorkshire£605.18£604.95-0.0%£604.95-4.6%

 

 


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