Insurance Premiums Drop
Biggest decrease since 1994
Figures released by AA Insurance show that the average quote for annual car insurance has dropped and it’s the biggest drop since the AA insurance index began in 1994. Comprehensive car insurance has dropped from £659.53 to £594.86 which is a 9.8% fall and third party fire and theft insurance has fallen by 4.8% to an average yearly quote of £820.58. Simon Douglas, insurance director at AA, said "this will be welcome news for hard-pressed motorists facing sharp fuel price increases. Insurers were facing a fast-widening gap between premium income and claims costs, largely driven by whiplash injury claims and fraud which saw very sharp premium increases between 2009 and 2011."
Last year a report from the House of Commons Transport Committee stated that the increase in claims for whiplash injury is the main cause of the rise in motor insurance premiums. Launching the report, committee chairman Louise Ellman said “whiplash claims were very costly for insurers to challenge and this was a type of injury ‘where diagnosis is often subjective.” Since then the Association of British Insurers have released figures showing false claims from drivers for whiplash have topped more than £1billion, because of these false claims approximately £50 was being added to insurance premiums. Now with improved fraud detection by the insurance industry and tightening of the law the number of new whiplash injury claims has been curbed.
Mr Douglas said "the news that hundreds of rogue 'no-win no-fee' claims firms have been reined in is welcome and in part, falling insurance premiums reflect that. I hope that Britain's shameful reputation as being the 'whiplash claim capital of Europe' will now be put behind us."
New Gender Equality Laws
Other contributing factors to a fall in premiums could be the new gender equality laws; this has lowered premiums for men by far more than expected while women's premiums have remained static. Also in April this year a ban on referral fees was introduced, they were paid by lawyers and claims management firms to breakdown firms, brokers and the insurers themselves, in exchange for providing information about accident victims. Anyone suing for accident damages with the help of a no-win, no-fee lawyer known as a conditional fee arrangement now has to pay their lawyer's success fee from their own funds if they win their case, it was previously added to the bill of the losing party. Claims are now more expensive to pursue so perhaps only motorists with genuine claims bother to go down this route.