Andrew Wild, head of legal at First4InjuryClaims.
“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, as well as publishing 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 have not been passed on.
“We are concerned that there are 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.”
Commenting on the launch of a government taskforce of industry experts and consumer champions to tackle spiralling insurance costs for drivers, Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (ACSO) which represents companies supporting consumers in the civil justice system, including insurance claims, said:
“It is regrettable that the promised CMA/FCA investigation, which would have been properly independent, has been shelved in favour of a largely industry-led approach.”
“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.”
“Insurers made a fortune during the pandemic, but management largely failed to anticipate the direction of travel in the market following the pandemic, and customers paid the price through soaring premiums.”
“Given motor insurance is a compulsory product, insurers must be far more transparent on pricing, and especially where investment returns are concerned, as well as the profits they make from customers who choose to pay their 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 shows fewer claims being made, despite rises in road usage post pandemic and accident rates are at similar historic levels.”
“High prices will have almost certainly increased the number of uninsured drivers on our roads, which is understandable given the soaring cost of insurance, and must be addressed including through robust police enforcement and better data sharing.”
Commenting on the Government’s proposed Taskforce, which will investigate the rising cost of motor insurance, Anthony Hughes, Chair and CEO of the Credit Hire Organisation (CHO), which represents companies providing mobility following an accident, said:
“It’s odd that the members of the taskforce investigating the high cost of motor insurance includes motor insurers. Labour made clear their intention to look at this issue before the election, so it’s no surprise that the new government has honoured its commitment, but if the industry investigates itself how do you avoid the outcome being skewed?”
“The CHO looks after nearly 500,000 people a year who need a car to get to work, or take their kids to school, following an accident. The cost of providing that service was calculated by the CMA to have been less than £5 on the cost of a motor insurance policy, which shows that we are a very small part of the overall indemnity spend.”
“Additionally, for the last 12 months we’ve been engaged in productive negotiations with our insurer counterparts to revise the GTA (a protocol which seeks to reduce friction in the credit hire claims process) and we are hopeful that we will agree a revised GTA that will equip the industry to process claims efficiently in a volatile and ever-changing market.”
FAIRER FINANCE COMMENTS
James Daley, Managing Director of consumer group Fairer Finance, said: “It’s great to see the government following through on its manifesto commitment to look at the rising cost of car insurance. But it’s important that the opportunity is not missed to look at issues in the insurance industry that run beyond the motor sector. Insurance pricing is opaque and not always fair to consumers – not just in motor but in all corners of general insurance. As pricing becomes more sophisticated and more personalised, growing numbers of consumers are finding themselves priced out of the market.
“It’s time to take a step back and look at how to build a fairer market that provides affordable access to insurance for all consumers. It’s encouraging that the regulator is also looking at premium finance – but this should include a consideration of whether we need this sector at all. It only exists because most insurers insist that consumers pay for their annual insurance upfront – forcing them to borrow at punitive interest rates if they can’t manage it.”
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