Numbers adding up for car insurers
UK car insurers paid out £2.41bn less in 2014 than in 2010, according to figures released by the Association of British Insurers (ABI).
It reports that motor insurers paid out £8.3bn in 2010 compared to £5.9bn last year.
And the numbers should make even better reading in the future following the commitment made by Chancellor of the Exchequer George Osborne in his Autumn Statement to reduce fraudulent minor injury claims.
Government figures say that minor injury claims cost the insurance industry about £2bn each year. By banning compensation for minor whiplash injuries and increasing the threshold from £1,000 to £5,000 for personal injury lawyers to take cases to the small claims court, that figure is expected to come down to £1bn.
Aviva CEO Mark Wilson said Osborne’s changes would ‘end the fraud pandemic’, but personal injury lawyers Thompson Solicitors believes motor insurers have exaggerated the problem.
However, Thompsons Solicitors says claims costs for insurers have been falling significantly in the last five years, but exaggerations of a whiplash claims problem has been used to ‘attack the rights of honest motorists’ and meant huge profits and dividend windfalls for the major motor insurers and their shareholders.
Tom Jones, head of policy at Thompsons, said, ‘Most of the car insurers are making record profits and seeing their share prices hit records highs, outperforming the rest of the stock market.
‘Meanwhile, premiums have increased 9.2 per cent in the last year, and motorists are threatened with legal changes that will mean they will either see less compensation because they will have to pay for their lawyer from their damages or they will have to take on insurers on their own if they are unfortunate enough to suffer a road accident.
‘On the evidence of the past few years, the government’s legal changes will deliver only one thing – a continued profits bonanza for the car insurers.’