The latest data from the government’s Compensation Recovery Unit (CRU) confirms a significant drop in injury claims during 2020. Following an FOI request, the Association of Consumer Support Organisations (ACSO), found that 172,000 injury claims were registered in Oct–Dec 2020, a drop of almost 50,000 compared to the same period in 2019. Motor injury claims, which make up the most significant proportion of claims on the database, fell to just under 140,000, a 23% year-on-year fall.
Looking at the whole year, the CRU reported a 47% drop in claims across all categories (motor, EL, PL and clinical negligence), from just over 843,000 to just over 445,000. Motor saw a 46% fall, to just under 356,000. Unsurprisingly, the biggest drop in claims was in Employer Liability, which recorded a 60% fall year-on-year between 2019 and 2020, mainly due to the effect of the pandemic and more people working remotely.
Commenting on the data, Matthew Maxwell Scott, executive director of ACSO, said: “The picture that emerges from last year is of a hugely significant fall in all personal injury claims. Covid has achieved over the course of 12 months what the government set out to do with its compensation reform programme.”
Mr Maxwell Scott said that such a significant fall in claims would bring about a large boost to insurer profits, meaning there was “no reason at all why consumers should not get their promised £35 reduction in motor insurance premiums now.”
CONSUMERS SHOULD BE GETTING REFUNDS
Admiral’s return of £25 to policy holders last year underlined that motor insurers have done very well out of the pandemic, and it seems fair that consumers should benefit. Maxwell Scott noted the latest ABI statistics which showed that car insurance had fallen by just 1% between 2019-2020, to an average premium of £465.
“Consumers should expect a much more substantial reduction in their premium than £4.65, so we urge insurers to do the right thing by Britain’s drivers and meet or beat what Admiral has done.
“The ABI estimates that the average bodily injury claim pay-out is £10K, so broadly speaking motor insurers have collectively saved £29bn in 2020 from a near 50% reduction in motor injury claims alone.”
Looking ahead, Mr Maxwell Scott said the government should hold off on pressing ahead with reforms to EL and PL claims in light of the sharp drop in incidence during 2020.
“Managing such fundamental changes to the RTA regime is a major task that will consume a lot of resources for all industry stakeholders, not just our members. Even more importantly we need to learn from these changes and impact assess them once the new regime has matured to then ensure any future changes are implemented effectively.”
“We argue that ministers should await the outcome of the first tranche of reforms, and have an eye to longer-term reductions in claims incidence, before ploughing ahead with planned changes to EL and PL, especially in view of the continuing pandemic and the chaos it is causing in civil justice.”
There is no doubt that most insurers had a good year in 2020, despite the furore over refused BI claims and the court cases surrounding them. Although some car insurers offered refunds, many did not and there is a strong argument for offering refunds based on reduced annual mileage – data from service centres of MoT stations as proof perhaps?
As some in our industry have noted, car insurance really needs a drastic rebuild from the ground up, with driver data and usage based policies becoming the norm. At the end of the day insurance is a contract that cover specific risks and that risk landscape has changed forever for millions of people.
We need insurance products for the post-pandemic world and insurtech partnerships, eco-systems and smarter use of data should underpin that process. Home insurance should now include working from home cover as standard, sole traders need a model similar to private medical, where a local lockdown and lost work results in a daily rate payment. This is the safety net that the government has so blatantly failed to supply, calculating that there are more people who are employed, than self-employed; net result furlough cash for the employed voters. Insurers can be the good guys by offering help that the State cannot be bothered to organise.
The trials involving e-scooters offer a huge opportunity to those insurers and brokers who can set up micro-payment policies at the point of hire. This is a model that can be scaled up to commercial freelance delivery drivers, occasional car commuters and Sunday motorcycle riders. By offering cover on-demand the industry can meet the expectations of modern consumers.