Cautious response to government’s motor insurance taskforce

Haigh: Direct action

Claimant representatives have raised concerns about a new government taskforce that promises to “crack down” on rising motor insurance premiums, including the lack of a legal representative.

The announcement came as Financial Conduct Authority (FCA) figures showed that premiums have grown by an average of 21% since June 2022, far higher than in the other major European economies.

Transport secretary Louise Haigh and economic secretary to the Treasury Tulip Siddiq will chair the motor insurance taskforce.

They will be joined by representatives from the Home Office, Ministry of Justice, Department for Business and Trade, Department for Education, FCA and Competition and Markets Authority (CMA).

It will be supported by a stakeholder panel consisting of the Association of British Insurers (ABI), British Insurance Brokers Association, Motor Insurers Bureau, Society of Motor Manufacturers & Traders, Citizens Advice, Which? and Compare The Market.

The taskforce “will identify the factors behind rapidly rising premiums and will agree solutions to keep costs under control”, the announcement said.

“Factors driving up the cost of insurance include inflation, rising car thefts, and the country’s pothole-ridden roads, which the government has pledged to fix with its pledge of filling up to one million more potholes every year.”

Ms Haigh said the government was taking “direct action” by bringing insurance companies and regulators together “to discuss how we can crack down on spiralling costs”.

The FCA said it would support the taskforce by “looking closely at claims costs, reviewing claims handling arrangements and factors impacting different types of claim”.

It will also analyse the impact of rising insurance prices on different customer groups, such as younger and older drivers and those from ethnic minority backgrounds or on lower incomes.

Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (ACSO), said a properly independent review led by the FCA and CMA, as previously mooted, would have been better.

“Why ask the ABI to be at the centre of an investigation into its own members’ pricing behaviour? I have little doubt that they will blame everyone in the claims supply chain for their own strategic failures.”

He said insurers had to be far more transparent on pricing, investment returns and the profits they make from customers who pay premiums on a monthly basis.

“However, at least the government is doing something, and consumer groups such as ACSO will seek to participate fully in the process.”

“We also call on the taskforce to explore whether insurance offers good value for money at the point of claim, especially as the data shows fewer claims being made, despite rises in road usage post pandemic and accident rates are at similar historic levels.”

Andrew Wild, head of legal at Huddersfield law firm First4InjuryClaims, said: “It is inevitable that the insurance industry is going to continue blaming the cost of claims for rising premiums, despite the huge savings they have made in the three years since the whiplash reforms as a result of fewer claims and lower payouts.

“The ABI called for extended fixed costs earlier this year in its own 10-point ‘roadmap’ to tackle insurance costs, and now has the platform to push its agenda.

“The taskforce needs to resist this and instead insist on a proper breakdown of how insurers are arriving at such exorbitant figures, which they have always refused to do, and publish the long-awaited findings of the FCA’s report into why the savings promised to motorists [from the whiplash reforms] have not been passed on.”

Mr Wild said he was concerned that there were no legal representatives on the stakeholder panel, “who can explain how insurers’ own conduct pushes up the cost of claims. We urge ministers to engage with those of us on the frontline”.

John Kushnick, legal operations director of National Accident Helpline, added: “While the response and ‘direct action’ is welcome, this taskforce must get to the crux of rising premiums… Ultimately, it’s a case of UK car insurance payouts lagging far behind the rising cost of cover with the reason behind this – insurers’ greed.”

He argued that the ABI has “attempted to blame a non-existent compensation culture, changing the laws drastically to make it harder to claim, all the while premiums keep on increasing”.

National Accident Helpline research has found that, “while injuries are increasing since the pandemic, claims are still winding down, due to factors including stigma around claiming and fears of the legal system”, Mr Kushnick continued.

“We need to guarantee that insurers are being held accountable, not only to tackle inflated premiums but to ensure that claimants who are entitled to compensation to rebuild their lives, can and will.”

Haigh: Direct action

Claimant representatives have raised concerns about a new government taskforce that promises to “crack down” on rising motor insurance premiums, including the lack of a legal representative.

The announcement came as Financial Conduct Authority (FCA) figures showed that premiums have grown by an average of 21% since June 2022, far higher than in the other major European economies.

Transport secretary Louise Haigh and economic secretary to the Treasury Tulip Siddiq will chair the motor insurance taskforce.

They will be joined by representatives from the Home Office, Ministry of Justice, Department for Business and Trade, Department for Education, FCA and Competition and Markets Authority (CMA).

It will be supported by a stakeholder panel consisting of the Association of British Insurers (ABI), British Insurance Brokers Association, Motor Insurers Bureau, Society of Motor Manufacturers & Traders, Citizens Advice, Which? and Compare The Market.

The taskforce “will identify the factors behind rapidly rising premiums and will agree solutions to keep costs under control”, the announcement said.

“Factors driving up the cost of insurance include inflation, rising car thefts, and the country’s pothole-ridden roads, which the government has pledged to fix with its pledge of filling up to one million more potholes every year.”

Ms Haigh said the government was taking “direct action” by bringing insurance companies and regulators together “to discuss how we can crack down on spiralling costs”.

The FCA said it would support the taskforce by “looking closely at claims costs, reviewing claims handling arrangements and factors impacting different types of claim”.

It will also analyse the impact of rising insurance prices on different customer groups, such as younger and older drivers and those from ethnic minority backgrounds or on lower incomes.

Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (ACSO), said a properly independent review led by the FCA and CMA, as previously mooted, would have been better.

“Why ask the ABI to be at the centre of an investigation into its own members’ pricing behaviour? I have little doubt that they will blame everyone in the claims supply chain for their own strategic failures.”

He said insurers had to be far more transparent on pricing, investment returns and the profits they make from customers who pay premiums on a monthly basis.

“However, at least the government is doing something, and consumer groups such as ACSO will seek to participate fully in the process.”

“We also call on the taskforce to explore whether insurance offers good value for money at the point of claim, especially as the data shows fewer claims being made, despite rises in road usage post pandemic and accident rates are at similar historic levels.”

Andrew Wild, head of legal at Huddersfield law firm First4InjuryClaims, said: “It is inevitable that the insurance industry is going to continue blaming the cost of claims for rising premiums, despite the huge savings they have made in the three years since the whiplash reforms as a result of fewer claims and lower payouts.

“The ABI called for extended fixed costs earlier this year in its own 10-point ‘roadmap’ to tackle insurance costs, and now has the platform to push its agenda.

“The taskforce needs to resist this and instead insist on a proper breakdown of how insurers are arriving at such exorbitant figures, which they have always refused to do, and publish the long-awaited findings of the FCA’s report into why the savings promised to motorists [from the whiplash reforms] have not been passed on.”

Mr Wild said he was concerned that there were no legal representatives on the stakeholder panel, “who can explain how insurers’ own conduct pushes up the cost of claims. We urge ministers to engage with those of us on the frontline”.

John Kushnick, legal operations director of National Accident Helpline, added: “While the response and ‘direct action’ is welcome, this taskforce must get to the crux of rising premiums… Ultimately, it’s a case of UK car insurance payouts lagging far behind the rising cost of cover with the reason behind this – insurers’ greed.”

He argued that the ABI has “attempted to blame a non-existent compensation culture, changing the laws drastically to make it harder to claim, all the while premiums keep on increasing”.

National Accident Helpline research has found that, “while injuries are increasing since the pandemic, claims are still winding down, due to factors including stigma around claiming and fears of the legal system”, Mr Kushnick continued.

“We need to guarantee that insurers are being held accountable, not only to tackle inflated premiums but to ensure that claimants who are entitled to compensation to rebuild their lives, can and will.”