Money Talks

Whiplash fraud: What you told us

Recently I wrote about new technology that could potentially stamp out dodgy whiplash claims by spotting fake injuries from real ones. We've had hundreds of comments and emails in response so here’s a summary of what the UK’s drivers had to say on the subject.

Claims for whiplash are costing the insurance industry £2 billion a year. Insurers offset this cost by raising car insurance prices. So whiplash claims, whether you've made one or not, results in every driver paying more for car cover.

So it’s no surprise that we had a huge response to an article in our last newsletter, which described new technology that could be used to stamp out fraudulent whiplash claims in a bid to reduce the rising cost of car insurance in the long-term.

Chances are you know someone who has made a whiplash claim or have done so yourself. And who can blame you - it seems there’s a lot of money to be made from whiplash injuries and drivers are positively encouraged to jump on the personal injury bandwagon after an accident.

But the real problem is when there’s not a genuine injury to claim for, as this doesn’t seem to stop people, or personal injury solicitors, pushing claims through.

Is the system just a cash cow?

On reader who contacted summed up the problem. He said: “I once saw some youths in a slight back-end bump. One whispered to his mate 'Hold your neck, say you’ve got whiplash, there’s two grand in it.’”

Physiotherapist Don Gatherer, who has developed the new pain-detecting tool which diagnoses whiplash, is hoping that by helping those with genuine claims, fake claimants will be discouraged.

Another reader outlined his experience with a genuine whiplash injury. Genuine cases case be serious and costly to treat. He said: “Over a year ago I had someone run into the back of me leaving me with whiplash, it was extremely painful. I agree fraudsters should be stopped from getting away with it but there are people who are genuinely injured and they shouldn’t be penalised for something that isn’t their fault.”

Changing the compensation culture

Plenty of readers got in touch explaining their dealings with personal injury solicitors, or claims management companies, which encouraged them to make a claim.

One reader said he was “harassed” by a claims management company following a minor bump in his car. “I had no pain and felt fine but the callers really pushed to try and make me say I was hurt.”

And many more of you got in touch to slam the  so-called compensation culture in the UK. “I think this technique for detecting true whiplash injuries is just great,” said one reader. “It is not only the ’victims’ who are responsible for the claim culture, an awful lot of the blame must go to the 'no win, no fee' lawyers who are constantly touting for business.”

But another driver, who made a false whiplash claim and received £1,500, stands by his right to a payout. He said: “I may be a cheat but I lost my car and had to buy a new piece of junk because my premiums increased from £1,700 to £3,600. When premiums are this high it’s impossible for the poor not to claim.”

How can it lower your insurance?

Some people commented that implementing new technology like this will only push premiums up but Gatherer and his team at the Royal Buckinghamshire hospital hopes it will provide a long-term solution to the problem of rising car insurance premiums.

The annual cost of a comprehensive car insurance policy rose by 35.7 per cent in the first three months of 2011 - a rise of £220 over the past year.The chances of this falling any time soon is slim but one thing the insurance industry does seem to agree on is this: cut the number of claims made and insurance premiums will eventually come down across the board.

*Confused.com/Towers Watson Car Insurance Price Index

Annoyed by Scottish Power price hikes? How to avoid paying exit fees to switch supplier

Is your gas and electricity supplied by Scottish Power? Annoyed by their recently-announced price hikes - 19 per cent for gas bills and 10 per cent for electricity - but don't want to pay their costly exit fees for leaving? Well, you don't have to. I've found a loophole.

Not only did I have to go through the baffling process of switching to move to Scottish Power a few months back, unimpressed with their newly announced price hikes,I face switching again - in order to leave. And to make matters worse, I have to pay a £50 exit fee.

An exit fee isn’t something buried in the ts&cs; gas and electricity companies make exit fees quite clear when you switch to their service.

The fees are typically £20 per fuel but prices vary between suppliers and even between tariffs offered by the same supplier. Scottish Power’s exit fee for my particular online tariff is £50.

But not all is lost as it turns out there is a way to avoid getting stung by these exit fees as you turn your back on energy price rises.

How to avoid an exit fee

Scottish Power had been supplying my energy for less than one month when the rises were announced, so a bit miffed to say the least, I set about leaving and getting them to cancel this exit fee: I was prepared for a fight.

I called the firm’s customer service line and bombared the polite adviser with reasons for why I wasn’t prepared to pay it. When I finally drew a breath I was told that I didn’t have to pay if I switched before 1 August.

“Oh”, I said, stopping in my hot-headed consumer tracks. “That’s good then.” But a few questions later it transpired that it’s not so simple as a fee waiver.

 A hasty move might cost you

According to the adviser, the way to avoid the fee is to call or email Scottish Power and say specifically that you’re leaving because of the price rises.

If I hadn’t called Scottish Power and had just gone ahead and switched, I’d have been charged to leave.

This is great news for anyone looking to get cheaper bills but I have a feeling that its not very well advertised – if at all. And despite our best efforts to contact Scottish Power on a number of occasions to verify this, they failed to respond to our requests.

So if you're not happy with a price rise, call your supplier and inform them that this is the reason you wish to leave, that way when you switch, you shouldn't have to pay an exit fee. 

Make sure you use a comparison site accredited by consumer watchdog Consumer Focus like Confused.com when shopping around for a new gas and electricity supplier.

New driving licence plans provoke huge response from readers

News stories about young drivers, particularly those concerning insurance costs or road crashes, are always huge talking points. Whether you are a young driver or a parent of one, the likelihood is you’ll have something to say.

But the response we received following an article in the last Confused.com newsletter was unprecedented.

I reported that road safety charity Brake had announced proposals for a graduated driving licence, and that it was lobbying the government in a bid to cut road deaths among young and new drivers.

I expected a few emails and a bit of a response but what I got was: more than 200 emails; over 300 comments on the article; and close to 40,000 views on the You Tube video that accompanied the piece.

All of which clearly goes to show the strength of feeling surrounding this highly emotive subject.

I had emails from bereaved parents, who fully supported Brake’s suggestions. I had emails from disgruntled young drivers, slamming the “draconian” proposals. I had emails from driving instructors, motor industry professionals and people overseas, including Canada and New Zealand.

For those who didn’t read the original, here’s what Brake is proposing in a nutshell.

They want to see a “graduated driving licence”, which would compel new drivers to undergo a minimum learning period of one year before taking a driving test. Once passed, the novice driver would be allowed to drive unsupervised but would have restrictions on their licence for a minimum of two years.

Other key components include: 

• Restrictions on the time of day that young drivers can drive
• Giving young drivers a lower alcohol limit
• Restricting them from carrying young passengers
• Banning motorway driving in the first year after the test
• A second driving test at the end of the two-year period to help ensure safe driving on all types of roads.

Overall the response was mixed – some fully support the campaign, others think it’s an outrageous infringement on people’s right to use our roads.

Other people had their own suggestions. Most frequently people said that restricting the engine size of the vehicles young drivers can use was the way forward, in a similar way to how motorbike licensing works.

All good in theory, some others said, but you only have to go 40 mph to kill yourself behind the wheel, they pointed out.

As well as response from readers other figures in the motoring world pitched in.

Nigel Lacy, co-founder of Young Marmalade, a young driver-specific insurance product, said: “The problem with this sort of graduated licensing is that it only really hurts young drivers who are driving in the correct manner and not those responsible for the majority of accidents.”

Robert Gifford, from the Parliamentary Advisory Council for Transport Safety said the proposals “offer a way forward for this apparently intractable [young people involved in road deaths] problem. I hope that the Government will give them the serious consideration they deserve.”

But the Transport Minister, Mike Penning, the person Brake will ultimately need to convince if their proposals are ever to take effect, said that although he wasn’t 100 per cent convinced about the graduated licence, he “fully support the UN Decade of Action (which coincides with Brake’s campaign) and will be publishing a new strategic framework for road safety, setting out our vision for further reducing deaths and injuries on Britain's roads.”

So it seems like everyone is agreed: something needs to be done to make our roads safer. But we’re still not sure what the solution is...

Here is a selection from the hundreds of comments you’ve sent us on this subject.

 “Lets face it the most dangerous people on the road are those that don't bother taking a test and drive without insurance.”

 “This is just another of this barmy nanny state ideas I have been driving for 37 yrs taught young people to drive in both day time and at night and not one has had the need of being in by 11pm or being told whom to carry, but out of peoples lives let them learn by there own experiences, drivers of all ages make mistakes this the thin edge of the wedge.”

 “Is this not a case of shutting the stable door after the horse has bolted? How would the new proposals be policed, given that police numbers are being cut by the very government who will have to implement these changes?”

 “It is about time! Motorcyclists have been subject to a similar regime for years.”

 “What a  fantastic idea! I am 41 and have been driving since 1991. In that time I have been involved in 3 accidents - all were shunts from behind, so I was not at fault in any of them. The latest shunt was September 2010, while I was stationary at a crossing.  Before the shunt my insurance was £240 a year. It has now gone up to £463! And for a crash that wasn't my fault! Incidentally, all the shunts were performed by male drivers. So I feel even more annoyed that insurance costs have soared for women drivers.”

Are budget airlines’ bad habits being adopted by more established airlines?

Lois Avery, Confused.com reporter reveals the latest charges the not-so-budget airlines are trying to push on passengers at check-in.

Budget airlines have bagged themselves a reputation for cashing in on their customers over the years, charging for anything and everything.

From online check-in, to card payments and even suggestions by Ryanair that it was about to charge customers to use its aircraft’s toilets, certain low-cost carriers are reasonably cheap but not so cheerful.

So when you fly long-haul or you’ve paid a hefty sum for a flight overseas you expect to be treated differently.

You expect to be fed, have free films, free drinks, including alcohol. And you certainly expect to have a seat allocated to avoid the mad scramble and long queues often seen at the Easyjet and Ryanair desks.

But it seems that even the longer-established airlines are now adopting the no-frills approach.

I recently flew with Air Canada across the Atlantic and this is what happened:

On the return flight I was told that my boyfriend and I could not sit together because the flight was all booked up. Fair enough you might say if we’d arrived half an hour before departure. We all know the best seats go early, if you want extra leg room, you used to make sure you’re at the front of the check-in queue. But this is no longer the case.

We were first in the check-in queue thanks to an early transfer and expected to have our pick of the seats but were told that the flight (a connecting flight not due for take-off for nearly seven hours) was full, so we’d have to sit apart. Full? How was it possible that a Boeing 777 with a passenger capacity of more than 350 was full seven hours before take off?

The Air Canada staff member couldn’t fathom the answers, so I’m not sure how we were supposed to.

The only thing I can assume is that a huge proportion of the passengers due to take our flight had pre-booked their seats online, something you can now do on long-haul, up to 24 hours beforehand to skip the first come, first served check-in queue system.

Had I known this, I’d have done the same and avoided hanging about in a queue only to end up sitting alone for eight hours. But what I really resent is paying £600 for a flight and then having to pay for the privilege of sitting next to my travel companion on top. We weren’t even offered this at the time of booking but i've since discovered that, in order to book what Air Canada call ‘preferred seats’ so legroom etc, it would have cost an additional $75 Canadian dollars each. But we could have pre-booked our seats online for free up to 24 hours before take-off, but we didn’t know this was an option on long-haul.

It looks like even the better respected airlines might be heading for the Ryanair-style scramble when it comes to checking-in, which is a shame for the air travel industry.

So, to avoid sitting alone I recommend checking the website of the airline you’re travelling with a day or two before to try and check in online. That way you can pre-select your seat, but be warned, extras may cost you.

Living a life without the internet thanks to Royal Mail

Living a life without the internet might seem like an alien concept for the majority of us but for me it has become a very frustrating reality, after I discovered my address didn’t exist.

I recently moved house and like a lot of people, I was keen to set up broadband quickly. But after just one phone call; I hit a brick wall.

I’m an o2 customer and wanted to give its broadband a try. But after a few minutes on the phone to a sales advisor it transpired that my new address wasn’t listed on its database.

“Can’t you add it” I asked? “No, I’m afraid you’ll have to get in touch with the Royal Mail,” was the response.

So I called Royal Mail, because apparently the responsibility rests with it to keep the national PAF (Postcode Address File) up to date so that companies, like o2, can access addresses for the millions of homes in the UK.

But it’s not that simple. I had to email the Royal Mail ‘address team’ to explain my situation, after which they said they would ‘investigate’.

To put it into context; I live in a basement flat. It’s not a new build but it’s a new conversion in an old building. The rest of the building goes by ‘Number 17’, as does my flat. The only difference being that my flat has a different front door – so our post is delivered separately, so we’re seen as a separate address when it comes to things like broadband and gas and electricity.

A week after contacting Royal Mail, I received confirmation they had completed the investigation and we now had a new name ‘Basement Flat’ and would be registered on their PAF system within 48 hours.

So, I promptly called o2 back and said we were now registered and please could I have broadband. But it was still a resounding ‘no’ because this change could take up to 6 weeks to filter down to their address system! And the same applies for some other broadband providers I tried.

So for the time being I am still without broadband and no doubt in a similar, frustrating, situation to many people in new builds or new conversions who find that they simply don’t exist.

Have you had a similar problem? Let me know via Twitter @confusedlois or email me at lois.avery@confused.com

How a new type of insurance could change the way young people drive

Car insurance isn’t usually something to get emotional about but last week, at a press launch of a new type of car insurance, I felt myself welling up.

A new type of insurance being promoted by The Cooperative, and to showcase it the Insurer invited along road safety charity Brake and one of its campaigners, Nick Bennett.

Normally I can see through a PR stunt and would brush it off as a bit of shameless self-promotion on the insurer’s part, but this time the message was hard hitting.

Nick is 27 and has been in a wheelchair since he was 19 because, like many young drivers, he was full of bravado and as a result, crashed head first into a 3 tonne lorry.

One of the biggest car insurance debates of late has focused on the need to better train young drivers, particularly males, who make up a significant proportion of the UK’s road deaths and serious injuries, and pay huge car insurance premiums as a result.

Despite his disability, which includes speech problems, Nick spoke to us and said: “I was on my way to work and it was early in the morning.

“I came up behind two slow vehicles in front so I overtook them. I woke up after spending 3 and a half weeks in a slow recovery coma. Somebody told me I’d crashed my beloved Corsa.

“My message is, please please, please, don’t think you can drive recklessly without suffering consequences.”

Nick then went on to speak about the new Smartbox technology from The Cooperative – the real reason all us journalists we’re asked to convene at the Goodwood racetrack. It’s a new type of insurance, which rewards good drivers with cheaper car insurance.

The Smartbox works by monitoring how you drive using G force and GPS technology. So if you’re the sort of driver who accelerates aggressively, brakes harshly or regularly exceeds the speed limit then this box will pick it up, and will penalise you for it.

Nick said he’d have thought twice about over-taking if he knew it would cost him more money.

It’s a fact; young boys have more car accidents. When you read about a fatal car crash involving teenagers it’s usually the lads because they’re risk judgment is less developed.

Just last week I saw a group of lads in battered old Corsa necking cans of Carling. The driver then mounted the pavement to avoid a traffic queue and nearly took out a cyclist before diving down a side-road.

Perhaps you are a young driver, or maybe you’re a parent of a young driver. If so, then no doubt you’re staggered by the cost of insuring even the most basic, low value, car.

But more importantly, as a parent, you probably worry that inexperience and a tendency to show off behind the wheel will end up with a knock on the door from a pair of police officers.

So not only could this new technology ease the burden of paying these sky-high premiums, it could go some way to knocking some sense into would-be reckless drivers. I’m not here to sell the product, just to inform and offer opinion- you make up your own mind and if you want to know more, see my article ‘how a black box means cheaper insurance for young drivers.’

Let’s hope plenty of young drivers take it up and other insurers adopt similar policies to get this rolled out across the board.

The hunt for cheaper energy bills - my comparison nightmare

We’re constantly being told to switch to save on our gas and electricity bills. And after the main energy providers all recently whacked their prices up, this message has never been stronger.

So I decided to bite the bullet and sort my household bills out. I’ve just moved into a new flat and wanted to start off well by not paying over the odds for gas and electricity.

I contacted the Big Six; British Gas, E.ON, EDF, npower and Scottish Power. My current provider is Southern Electric and I’d already established that it wasn’t my cheapest option.

I know online is usually the easiest search tool but I called the sales hotline of each provider to see how they fared on customer service.

I was armed with very little information. I knew my new postcode and my current supplier. I also knew I wanted to get a quote for annual and monthly spend from all of the providers and I needed to know if their best deal was online and whether it was paperless.

Here’s how I got on:

npower

My first call was to npower. The sales advisor was very chirpy and helpful. So helpful in fact that, when I explained that I had no idea what my usage was or what my annual spend is, he gave me the government average in units for both gas and electricity for two people living in a one bed flat. He then explained that my best option for getting a fair comparison was to quote those figures to the other providers. No hard sell, just useful information.

He said their best deal was an online only tariff and said my best bet was to sign up via their website.

Was the online tariff their best deal? Yes  

Paperless billing? Yes

British Gas

I made the call at around 3pm, so not exactly peak time, yet had to hold for several minutes. The sales advisor was very friendly, albeit a bit on the pushy side.

After taking my postcode, she told me that British Gas was the cheapest supplier in my area, even quoting the percentages by which their rate was better.

Annoyingly though every time I asked a question, or she needed to find something out, I was put on hold. Six times in total over a 15 minute call. I was quoted an annual spend of £780. This is before any of its discounts had been applied. I was then bombarded with percentage discounts for various tariffs; six per cent for their web tariff, 4 per cent for online account, yet she couldn’t tell me what the annual spend was once everything was applied.

And it later transpired after I did my sums that British Gas wasn’t the cheapest at all. In fact, it was the most expensive based on the average usage I gave all the suppliers.

I was almost tempted by the £75 credit the sales advisor was offering. I asked if that meant that the first month or two were technically free. This is when I was told that the credit didn’t come through until the end of the 12 month contract. The sales advisor was polite but pushy and I had to insist that I wasn’t interested in signing up there and then several times.

Was the online tariff their best deal? Yes  

Paperless billing? Yes

EDF

The call to EDF Energy was pretty swift. I explained what I was after, gave the sales advisor the usage figures npower had given me and was given the yearly spend average of £728.38. The only issue was, at the end of the call, I was told that the tariff I’d been given information about was due to end at 8pm that evening and would be replaced by a slightly more expensive offer.

But there was no sales pressure, just a quick rundown of the basic information.

Was the online tariff their best deal? Yes  

Paperless billing? Yes

EON

Despite EON’s call centre having a special ‘home move’ area for new sales enquiries the sales advisor wasn’t very helpful. The conversation fell silent after a few seconds of searching for my address with no luck. When it started to get awkward, I suggested running an average quote, based on some average consumption figures, and the sales rep agreed. It came back at £568 per year, which was far cheaper than the other providers. Usually that would be a good thing but I was left so unconvinced by the advisor’s expertise that I wrote it off as being too cheap, and therefore probably inaccurate.

Was the online tariff their best deal? Yes  

Paperless billing? Yes

Scottish Power

Last but not least I called Scottish Power. The call was by far the most helpful, because the sales advisor was the only one to tell me how much its energy cost per kilowatt and per unit. Which is after all, what determines how much you’ll pay. None of the others gave me this information and it wasn’t until Scottish Power did that it dawned on me that it might be useful to know – remember I came to this with no idea what I was doing. The annual average came out at £739.

Was the online tariff their best deal? Yes  

Paperless billing? Yes

How much did I save?

The big question hanging over all of this, and what I really wanted every provider to tell me was ‘how much will signing up with you actually cost me?’

But it seems that unless you want to fix or cap your energy usage there’s no real way of knowing how much will disappear from your bank each month. And unless providers tell you what they charge for gas and electricity it’s difficult to make a fair comparison.

In the end, I shopped around online and switched to Scottish Power. But I may well be switching again in a few months time if the bills don’t fall within their estimate.

ISA transfer: Is it as simple as they say?

I’ve had a cash ISA since I opened my student bank account 8 years ago, and I’ve been drip-feeding it with money over the years. But until recently, I hadn’t paid much attention to the rate of interest I was getting.

So when I realised that NatWest was offering me a sorry 0.5% I decided to switch, and set about arranging an ISA transfer.

At first I considered transferring to another bank with a better rate but I found that most of the best cash ISA deals were open to existing customers, which excluded ISA transfers.

And I don’t know about you but my online existence is already dominated by more passwords and login details that my brain can record, so the idea of another bank account, with another bank, seemed like a bit of a chore.

Instead I found a one year fixed rate ISA with my existing bank, paying 2.65%.

I could have got a rate 1% better with another bank but for the sake of being able to see all my accounts in one place when I log into my online banking, I personally preferred this option.

I expected the transfer process to be complicated. I imagined drowning in a sea of forms, so I went to the nearest Natwest branch to ask for some help.

Luckily, I was being over dramatic; it genuinely is a simple process.

I was directed to go online and fill in an ISA transfer form – although I could have done it by post as well. That way my money will be moved across to a new account without losing any of the tax-free benefits.

Once it’s filled in and submitted the bank does it all. They’ll open the new account and move my money across for me in April, when the year fixed term starts.

So, come April my money will be sitting in an account with a better rate, all at the click of a button.

Even moving to another bank is easy, so I’m told – I was assured by staff that it just involves filling in a form at your bank or building society of choice and waiting for them to move your money over.

Have you transferred an ISA? If so, was it a painless process? Let me know via email lois.avery@confused.com or on Twitter @confusedlois.

And if you’re money’s floundering in your current ISA you can shop around online before making the move.  And don’t forget you don’t have to go to your branch to arrange the transfer, this can all be done online too. 

How driving one mile further for fuel can save you money

There are a few things I refuse to pay for. I will never pay to use a cash machine, I will never pay a fee to use my debit card if I haven’t made the minimum spend, and I won’t ever pay shops that charge you for the privilege of getting cashback.

And now a new addition: I won’t ever pay over the odds for petrol.

It won’t have escaped you that petrol is pretty pricey at the moment, and it’s a case of scouring around to find a petrol station offering the cheapest prices.

Last week I was taking a trip down the M4. My fuel gauge was running low and although I knew a stop at a service station for a top up would cost more than a non-motorway petrol station, I didn’t expect the difference to be quite so eye-watering.

The average UK price for unleaded at the moment is 128.7p, yet Leigh Delamere service station (BP) in Wiltshire is charging 137p per litre. I drove in, saw the huge price, had a mini heart attack, and drove back off the forecourt.

Had my tank been empty, I would have had no choice but to pay it. But I’m glad I wasn’t empty because a mile up the road, I found a petrol station offering unleaded for 125p a litre- a whole 12p cheaper and just a 3 minute drive!

The point here is – don’t give into it. Prices might be sky high across the board but there are ways to ease the blow if you shop around. Don’t use service stations, if you can avoid it. Supermarkets tend to be cheaper. If you see a queue at a petrol station, chances are it’s because it’s a good deal and everyone’s clocking on to it.

In my last blog, I asked whether the government would hold off on the proposed 1p fuel tax and I revealed that Confused.com had joined forces with The Sun newspaper in the fight against rising fuel costs.

The campaign - which involves a petition to government - is now fully underway, so as well as boycotting rip-off garages, we urge you to sign up to stop motorists being penalised even further.

Find out more about it here and add your comments on the campaign and petrol prices below.

The big fuel debate: Will the 1p rise go ahead or not?

Confused.com reporter Lois Avery talks petrol prices and the petition which could make the chancellor do a u-turn.

Running a car is now more expensive than ever, add to that a jump in the cost of rail travel and there’s no doubt we’re all feeling the pinch.

My train ticket, which covers my 40 mile commute to work, shot up by just over £20 a month on 1 January and my short journey to and from the train station is now costing more thanks to the latest jump in fuel prices.

What’s going on with fuel prices?

The recent VAT rise and fuel duty increase hit petrol prices hard, pushing a litre of unleaded up to an all time high of £1.30 meaning Britain now has the second highest fuel prices in Europe.

To make matters worse, fuel duty is set to rise by another 1p in April – a decision made by Labour chancellor Alistair Darling before the election last year.

But following mounting pressure from the public, the media and government opposition, chancellor George Osborne may make a u-turn on this, despite the fact it would deprive the Treasury of £500m a year at a time when public finances are stretched to the limit.

But why is it that petrol price hikes seem to grab the public’s attention more than other tax rises?

The VAT rise has pushed prices up on other day to day items but it feels minimal and  drip feeds in so we don’t feel too hard done by, a penny here, a few pence there unless you’re buying something big.

Perhaps it’s because every time you use your vehicle you’re reminded by your falling fuel gauge that you’ll have to fill up sooner.. Each journey costs you slightly more than you’re used to. And the more you have to spend on fuel, the less you have to spend on other things.

 So will the government scrap the planned 1p rise?

Osborne hinted during a BBC radio interview this week (27 Jan) that the government could potentially ‘override’ the 1p rise ahead of the 23 March Budget. There’s also the ongoing whisper of a fuel stabiliser, which would help protect motorists at the pump against the fluctuating price of oil.

But the Treasury is keeping tight lipped, saying that all taxes are under review and no announcement will be made ahead of the Budget.

But in the meantime, the Great British Public is taking a stand in light of the possibility and Confused.com has also waded in to throw its weight behind the protest.

We’ve joined forces with The Sun newspaper in the fight against rising fuel costs –find out more about the campaign which is calling on George Osborne to freeze petrol tax. We’ll be revealing more about this in our next newsletter, so keep an eye out for what we’ve got in store.

Are you feeling the effect of pricy petrol and diesel? Let us know how much more the proposed hike will cost you. Tweet me @confusedlois or email lois.avery@confused.com.

Why your car insurance is costing you more

You may remember back in November we reported on the government’s inquiry into the rising cost of car insurance.

Confused.com’s very own head of motor insurance, Will Thomas, gave evidence to the committee, which grilled several insurance industry representatives on the reasons for the dramatic rise in car insurance premiums over the last year.

Well, last week, the Transport Select Committee met again, this time to hear more evidence from a panel that included representatives from the police, the Association of Personal Injury Lawyers, the Claims Management Industry and the Transport Secretary, Mike Penning.

So if you want to know why your car is now more expensive to insure, read on.

 

Uninsured drivers

Fraud was a big discussion topic at this inquiry, just as it was at the first one and uninsured drivers were blamed for adding £30 to the annual cost of every motor insurance policy. Speaking at the inquiry, chief superintendent Geraint Anwyl, of the Association of Chief Police Officers' roads policing section said car insurance fraud has become "highly organised and very profitable."  He estimated that there are 1 million uninsured drivers on Britain’s roads today, which insured drivers are paying for.

Staged accidents and “crash for cash” claims are now blamed for a 50 per cent rise in the number of cases insurers are investigating.

But Anwyl admitted that police forces and the Crown Prosecution Service did not have the money or resources to prosecute small-scale fraud cases and suggested that insurance companies fund dedicated insurance fraud teams within the police to help them bring these cases to court.

The problem is so rife that a new Continuous Insurance Enforcement law, which was incidentally announced on the day of this hearing, is now in place. It means all vehicles have to be insured, even if they’re not driven.

Personal Injury Claims - access to justice and the compensation culture

The committee heard that, at the moment, all that a claimant needs in order to make a compensation claim is basic medical confirmation reporting that they have suffered in some way relating to the incident.  And it seems it’s difficult and expensive for insurers to disprove, resulting in escalating payouts.

All you have to do is switch the T.V on and you’re bombarded with no-win, no-fee adverts and companies offering to help to fight your cause, even if the accident happened years ago. I’ve even had texts offering to get me compensation – and I haven’t had an accident!

According to David Powell, from Lloyds Market Association (LMA), which submitted evidence to the committee, the difficulty is clamping down on fraudulent cases without harming those with legitimate claims.

But the argument that personal injury claims were responsible for pushing up car insurance costs was rebuked by a representative from the Association of Personal Injury Lawyers (APIL), who said that tougher restrictions would deny people their access to justice.

APIL say that the legal spend remains at 30 per cent of the cost of a claim, on average, and has remained static for much of the last decade and that the cost of claims has not increased but the number of claims has. As a result, insurers' costs have been pushed up by at least 30 per cent a year.

Transport minister, Mike Penning said the culture needs correcting: “The sheer culture we have in the UK that we seem to have inherited from America, is frightening.

"We are going to be in a situation like in America if we are not careful, where you get lawyers turning up at road traffic accidents."

Road safety

With the number of car insurance claims soaring, the discussion fell on  the issue of road safety and driver training.

Witnesses agreed that re-educating drivers was at the heart of the solution to keep accidents down, therefore reducing claims and, in turn, lowering motor insurance premiums across the board.

Penning said it was wrong that new drivers were let loose on the UK’s roads with no motorway experience and Tony Baker, director general of the Credit Hire Organisation, said that in order to manage prices the industry had to get to grips with risk first.

This was also something Confused.com heavily supported at the last meeting when we made calls for the government to step in and legislate where possible, in order to reduce the risks posed by inexperienced drivers.

Ambulance chasers

The committee was keen to hear how claims management companies could be affecting insurance costs and heard evidence from Laurence Beck, managing director of Accident Advice Helpline. Firms like this contact you when you’ve had an accident and pass your details on to a solicitor for a no-win no-fee representation deal.

This fee is then passed on to the insurer if the claimant wins.

Beck argued that the referral process was just a marketing tool to drive business and was such a small fraction of the claim cost that it wasn’t significant.

Credit Hire

The credit-hire industry was also scrutinised for their part in escalating claims costs for insurers.

Credit hire firms offer replacement vehicles to motorists whose vehicles have been damaged in an accident. The cost of this vehicle is then passed on to the other party’s insurer. The LMA explained that this creates significantly inflated costs for insurers, and can add as much as £600 on to the cost of a claims case.

Price-comparison sites

The sharp rise in car insurance prices over recent months was blamed on the insurance market “correcting” itself after a period of artificially low prices but price-comparison websites also came under fire.  They were blamed for introducing too much competition into an already fiercely competitive market.

The committee also heard how those customers who renewed their policy every year with the same insurer are the most profitable customers for the provider. But these profitable customers, who haven’t moved or shopped around in the past, are now moving because price-comparison sites are offering them much cheaper alternatives.

Access to DVLA records

During the hearing Penning revealed that the government was looking at giving insurers greater access to motorists’ driving records so they could accurately assess  driver’s points and convictions before they insure them.

This is a move to stamp out fraud, both intentional and unintentional. So whether it’s a driver deliberately concealing points on an insurance policy, or a driver who forgets to declare them, both invalidate policies and add to the uninsured driver problem.

The solution, which could roll out within six months, will allow insurers access to DVLA information that will automatically notify them of any penalty points or convictions. Drivers can opt out but this will obviously greatly reduce their chances of getting insured.

When questioned on tougher penalties for uninsured drivers Penning argued that car crashing was a bigger deterrent.

So that’s the debate summed up, now tell us what you think.

If you want to read more see how fraud is hitting the cost of insurance and read more on the big car insurance debate.

Let us know your thoughts and stories by commenting below or emailing them to lois.avery@confused.com.