- 83% want Government to honour its commitment to slash motor insurance costs
- Proposed reforms could reduce motor premiums by £43
- Aviva pledges to pass 100% of the savings to its customers
- Since 2000, accidents have fallen by 40%, but injury claims have grown by 89%
LONDON, 09-Sep-2016 — /EuropaWire/ — The overwhelming majority of Brits (83%) are calling on the Government to honour its commitment to slash motor premiums by reforming whiplash compensation laws, according to research by the UK’s leading insurer, Aviva.
The reforms, announced by the former Chancellor in last November’s Autumn Statement, would end cash compensation for minor, short-term injuries and limit lawyers – and their fees – to cases where their expertise is needed. Aviva’s research found more than 80% of consumers support the reforms. If implemented as envisaged, Aviva expects the ‘typical’ benefit to motorists would be a £43 cut to motor premiums – a reduction of 10% from the average price paid1. Aviva has pledged to pass on 100% of the savings to its customers.
Pressure for action from consumers is set to climb further as motor premiums continue to rise – up 10% year-on-year, according to recent figures from the ABI. Back-to-back increases to insurance premium tax, from 6% to 10%, are partly behind the increase. However, it is the frequency and cost of personal injury claims that accounts for 49% of Aviva’s claims costs and threatens to push prices skyward, and which needs urgent action.
Maurice Tulloch, Chairman Global General Insurance and CEO UK & Ireland General Insurance, Aviva, said, “Our research shows that the British public is sick and tired of the toxic compensation culture that has increased premiums, fraud and nuisance calls. The Government has an historic opportunity to make a significant change that will cut the cost of motor insurance – and it is clear that the British public is fully behind the reforms.
“It’s time to stop the nuisance calls, stop crash for cash, stop spiraling claims that push up premiums, and stop the profiteering at the injured party’s expense. It’s time to end this compensation merry-go-round and cut the cost of motor insurance for us all.”
The vast majority (85%) of Brits believe that Britain has a compensation culture, with almost nine-in-ten (88%) saying that too many people see compensation as an easy way to make cash. In addition, most people believe that our compensation culture fuels fraud, with 88% of respondents saying it encourages exaggerated and fraudulent claims.
The UK’s compensation culture can be seen in the contradiction of increasing injury claims despite fewer accidents and safer cars. Since 2000, road traffic accidents in the UK have fallen by 40%, while personal injury claims have grown by 89%2. The result is that the amount of premium devoted to paying personal injury claims has nearly doubled, from 25% to 49%, according to claims data from Aviva.
The easy access to motor injury compensation has also seen the rise of ‘crash for cash’, where organised fraudsters cause accidents on the UK’s roads that put innocent motorists at risk of real harm. Aviva has linked 4,000 motor injury claims to known fraud rings, and has seen the number of organised scams almost double (up by 98%) between 2011 – 2015.
Care, not cash and cutting legal costs However, this can be halted by treating minor injuries with care, not cash – making sure claimants get the care and rehabilitation they need, but not the cash payout. This will stop fraudsters inducing motor accidents, and put an end to the claims management companies and lawyers who aggressively chase injury claims through nuisance calls. The Government’s other proposed reform, removing lawyers from straight-forward, minor injury claims, will also curb excessive legal costs.
One out of two people (51%) are unaware that in addition to the legal costs for handling an injury claim, lawyers are also able to deduct up to 25% of the injured party’s compensation. Aviva’s research shows that 85% of people believe lawyers are paid too much – and only 3% say they are paid too little.
Tulloch continued, “A lot has happened since the injury reforms were announced last November. Upward pressure on premiums has made the cost of motor insurance a key consumer issue which must not be ignored in the post-referendum crush of activity.
“We know that our customers are keen to benefit from the savings offered by these reforms which is why we are calling on the Government to begin the consultation process so consumers will benefit from these savings as soon as possible.
“This is a unique opportunity to reduce the cost of living for the UK’s 30 million motorists. We have committed to passing on every penny of the savings from these reforms to our customers.”
As part of the Road to Reform report, Aviva has looked at what makes up an average premium and where the claims costs go to highlight the impact of third party personal injury claims. A copy of the report can be found here.
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Erik Nelson: firstname.lastname@example.org; 01603 682264 or 07989 427086
Notes to editors: 1Association of British Insurers Average Motor Insurance Premium Tracker, Q2, 2016 2Road traffic accident data from Department for Transport data for 2000 and 2015; motor claims data from the Government Compensation Recovery Unit for 2000/01 and 2015/16
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