This story in the Telegraph (posted on Pistonheads) shows another side to the situation, and is quite amazing -
Motor insurance premiums up by 34pc.
Car insurance policies have jumped by an average of £215 in a year fuelled by soaring levels of fraud and dubious whiplash claims, new figures are expected to reveal next week.
The AA will say the drivers can now expect to pay £845 for their annual policy, up 34 per cent from £630 last year. It is the biggest jump since 1994.
Almost half of the average insurance policy now goes to cover the cost of whiplash claims, fraud, legal fees and tax.
Simon Douglas, director of AA Insurance, said: “A proliferation of personal injury claim lawyers has led to the number of injury claims across the board sharply increasing, while fraud has eaten into insurers’ costs.”
The motor insurance industry is calling for tighter regulation of personal injury lawyers and claims management firms.
The number of whiplash claims has risen by 25 per cent in six years, despite the fact that the Government’s road casualty statistics indicate that the number of ‘’slight’’ injuries from road traffic collisions is falling. The number of companies offering claims management services and no-win, no-fee representation has almost doubled in the last year. Many have aggressive television marketing campaigns.
Meanwhile, £44 from every motorist’s policy goes to cover fraudulent staged accidents. These “crash for cash” claims are still so frequent in some parts of the country that drivers in some postcodes in the North West are finding it difficult to buy motor insurance at all.
Chief Supt Geraint Anwyl, of the Association of Chief Police Officers’ roads policing section, told the Transport Select Committee last week that the frauds were “highly organised and clearly very profitable”.
Induced collisions and staged collisions were taking place along with fictitious collisions, he said, risking lives as well as raising premiums.
The Insurance Fraud Bureau said that approximately 30,000 crashes were staged last year, with each claim averaging about £17,000. They cost insurers about £350 million and added £44 to the premium of every driver
Insurer Esure has reported a sudden 300 per cent increase in personal injury claims in the B31 postcode in Birmingham, despite there being no increase in accidental damage claims, according to the British Insurance Brokers Association. This means that for every £1 Esure collects in premiums, it is now paying out £3 in personal injury claims in that area of the city.
MPs recently grilled the insurance industry about the rising cost of premiums with insurers predicting that the problem would only get worse, claiming they have not made a profit for 16 years.
According to financial ratings agency Fitch, the insurance industry pays out £123 in claims for every £100 in premiums collected.
Young drivers are bearing the brunt of the price increases as the cost of annual insurance for those aged between 17-22 soared by 58.3pc, bringing the average comprehensive policy up to £2251. Third party, fire and theft (TPFT) customers fared even worse, facing an annual increase of more than 70pc over the last 12 months.
Another reason for the increase in premiums is the growing problem of drivers who are uninsured. It is estimated that about one out of every 20 motorists drives without cover, which costs every driver about £30 a year.
The Telegraph is campaigning for tougher penalties for uninsured drivers in order to deal with this problem. A new system announced this month by Mike Penning, the Transport Minister, means that uninsured drivers can be fined as little as £50, giving them little incentive to pay the soaring premiums.
Uninsured drivers are five times more likely to be involved in road collisions, to fail to comply with other road traffic requirements, and to be engaged in other criminal activity, according the Motor Insurers’ Bureau (MIB). One in five uninsured drivers fail to stop at a the scene of an accident they have been involved in.
