The Association of Consumer Support Organisations (ACSO) has urged the new Labour Government to honour a pre-election commitment to investigate the private motor insurance market.
This call follows the latest quarterly figures from the Compensation Recovery Unit (CRU), which show the lowest overall personal injury and road traffic accident (RTA) claims on record.
Matthew Maxwell Scott (pictured above), ACSO executive director, highlighted that the figures contradict insurers' claims that rising insurance premiums are driven by claims costs.
“There were nearly 78,000 motor injury claims registered between April-June 2024, 8,000 fewer than the equivalent quarter last year, and 13,000 down on the previous quarter. This is a reduction of well over 50 per cent since 2019,” Maxwell Scott said.
The Association of British Insurers (ABI) reported that average premiums rose by 25% in 2023 and have increased a further 1% this year to an average of £635. Maxwell Scott pointed out that insurers attribute these increases to claims inflation, despite the number of claims falling by more than a quarter since the implementation of the Civil Liability Act, which insurers had strongly supported.
He also noted that the Act also required insurers to cut £35 from every policy to compensate drivers for the reduction in their rights.
“Instead, we have got record premiums and insurers blaming injured people for price rises. Now they are agitating for more legislation to reduce or remove damages paid to people who suffer more than one injury in an RTA,” he said.
Maxwell Scott acknowledged that inflation has affected the insurance market, including claims costs, but disagreed with the notion that injured claimants are solely responsible for rising premiums. He suggested that other factors are contributing to the situation.
“An independent inquiry will establish some home truths about the way the insurance market for private motor works. Motor insurance is, after all, a compulsory purchase and the market should not be in a state where it becomes impossible, or economically unviable, to make a claim after an accident,” Maxwell Scott said.
Such conditions could also encourage uninsured driving, which is illegal and unfair to law-abiding drivers.
The association brought up the case of when then-shadow transport minister Louise Haigh announced plans for an inquiry, followed by insurance executives quickly criticising the proposal. One CEO even called the decision “flawed logic.”
“We argue insurers should instead welcome the inquiry, which will establish whether private motor is indeed as competitive as they suggest,” Maxwell Scott countered.
In discussing other types of claims, Maxwell Scott also noted that public liability injury claims have decreased by just over 2,000 compared to the previous quarter, continuing a long-term decline. Employers' liability claims saw a slight increase (12,001 from 11,566), while clinical negligence claims fell sharply, by a third, compared to the previous quarter.
“As always, the big story is motor injury,” he explained. “Much the same number of accidents are occurring, but the number of people making a claim has fallen off a cliff, suggesting claiming has become a hassle and the compensation paid out too derisory for the effort involved.”
He warned that if the public begins to question the value of motor insurance, it would be disastrous.
“This makes the government pledge for an inquiry into pricing timely and essential. Over to the Transport Secretary to deliver on her pre-election pledge,” Maxwell Scott said.
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