Motor insurance premiums
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I read with interest the recent article in the Law Society Gazette which stated that motor premiums have hit a record high as insurers' profits leap.
The Association of British Insurers said that an average motor insurance premium has now increased to £485 per year, an increase in £45 from last year.
The ABI did a accept that the rise was in part due to increases in insurance premium tax and average car repair bills, but took the opportunity to urge the Government to implement proposals to introduce a tariff for whiplash injuries and increase the discount rate for compensation payments.
Rob Cummings, Head of Motor and Liability at the ABI was reported as stating, "We urge the Government to publish a framework and timetable for making these reforms a reality so that we can have in place a system that provides full compensation to Claimants and benefits insurance customers".
Whilst some areas of personal injury have attracted bad press, such as staged road accidents and low velocity impact whiplash claims, in my opinion to attribute substantial premium rises to personal injury claims fails to accurately reflect the true position.
John Hyde of the Gazette made the astute point that insurance premiums are rising rapidly at the same time as profits of some insurers are soaring. He noted that Direct Line and Admiral have both posted higher interim profits and shareholder dividends.
Whilst the insurance industry states that it seeks a system that provides full compensation to Claimants and benefits insurance customers, the Government's proposed whiplash tariff system and increase to the small claims limit in road traffic accidents to £5,000 will see insurers and their shareholders benefit at the expense of innocent Claimants.
The proposed tariff system would see a Claimant who has suffered from a whiplash injury and minor psychiatric injury for up to 9 months receiving just £765, which is quite frankly derisory. Further, a rise in the small claims limit to £5,000 will see many Claimants lose access to legal representation for not insignificant road traffic accidents, leading to the real possibility that they end up undercompensated or fail to pursue their genuine claims altogether.
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