The car insurance debate: The ABI view

As no motorist needs reminding, the cost of car insurance is rising. The issue has become so contentious, that the government has got involved and a debate has taken place in parliament, one in which Confused.com took part. Read the car insurance debate then see what the ABI has to add to it below.

By the Association of British Insurers

One of the main reasons for the rising cost of car insurance is the spiralling legal costs in settling personal injury claims following road accidents. The ABI’s (Association of British Insurers) analysis of over 50,000 low value road accident personal injury claims shows that settling the average claim of £2,430 costs the insurer an extra £2,100 in legal fees, almost equal to the amount as the settlement itself.  And, for every £1 insurers pay in compensation, an extra 87 pence is now paid out in legal costs for claims valued at under £5,000.   

So why are the legal costs so high?

Some claims management companies have transformed today’s ‘claims culture’ by fuelling public belief that behind every accident there is a claim to be made.  Little does the consumer know that these companies often have very high legal fees, which are paid out by the insurers, who in turn have to add this to the cost of motor insurance premiums.  This of course ends up being paid for by the customer.

This is clearly excessive and unfair to the consumer who now has to pay out on average an extra £40 a year to their motor insurance premium to help cover the cost.

Action needs to be taken

Something needs to be done to reduce high legal costs.  We need a simpler, faster, more cost-effective compensation system that gives claimants a much better and fairer deal. Reducing excessive legal costs is essential to achieving this and is why ABI agrees with Lord Young’s recent report on tackling the health and safety culture and wants to see the recommendations of Lord Justice Jackson’s review of civil litigation costs implemented in full as soon as possible.

This is just one side of the argument so read the APIL's views concerning compensation for motor accidents.

Read the report into rising car insurance costs and see Confused.com in action in the parliamentary debate (this opens in a new window, and you may have to install Microsoft Silverlight to watch the video).

We’re interested in your comments on the proposals and the subject of rising car insurance as a whole. Is there something Confused.com should do to help halt them? What would you like to see happen? Please comment below.

Comments

[David Forden]

Extra £40, I should be so lucky. Try extra £300! No explanation other than the area I live in and ever increasing costs.

[Bill Appleton]

Personal Injury Lawyers are typically greedy. Selling car insurance to women at cheaper rates because of their sex is unlawful and discriminatory.

Insuranc companies should be employing their own lawyers to bring down costs - a few dozen ambulance chasing hacks would be cheaper than the outsourcing they currently practice.

Insurance companies could save money by not sending me junk mail, and pointing out to shareholders that a share in a company is also a share of the responsibility when times are bad, and not just a share in the profits they demand at the cost of the customer.

[Edward Hubbard]

Selling cheaper car insurance to women is obviously not illegal, Bill Appleton. If it was, it wouldn't be common practice, would it?

[Katie Jones]

This year my car insurance would have cost me double what it did last year if I had stayed full comp...more than half the value of the car itself! I have been driving for four years now and have built up my no claims bonus. So why am I discriminated against just for being younger than 25? I see people considered 'more experienced' who shouldn't be anywhere near the road! I bet I wouldn't be too wrong in suggesting that it is these 'more experienced' people who are also more likely to claim. A young driver couldn't take the risk of increasing their premiums the following year!

Everything in Britain these days is built against the hard working, honest people in society. This blame culture we are adopting from America needs to stop. Life has become too easy for everyone who deserves it the least!

[Jennifer Pratt]

I feel that if people who are fined for driving without any insurance were fined at a higher amount than the insurance would have cost them, this would be more of a deterent. The argument that people are fined what they can afford to pay back is no justification, as if they can't afford the insurance in the first place they shouldn't be driving and expect other motorists to foot the bill.

[ppi claims]

There are countries whose monthly insurance are lax and much more affordable. The only serious time you will pay additional variable pricing is when you use your insurance to cover things such as repairs.

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