We won’t intervene over insurance prices, admits Treasury

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The Treasury has admitted that it has no intention of intervening to force insurers to pass on savings from whiplash reforms.

The reforms include plans to increase the small-claims limit for personal injury claims to £5,000, as well as scrap general damages for RTA soft-tissue injuries.

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They reforms are largely founded on the expectation - and in two insurers’ cases a public pledge - to pass on 100% of resultant savings to consumers in the form of lower car insurance premiums.

A Ministry of Justice press release last month said the move would cut annual insurance premiums by around £50. 

But a written parliamentary answer to a question from shadow justice minister Andy Slaughter has revealed the government has no mechanism in place to actually enforce the promise.

Treasury minister Harriet Baldwin said the pricing of insurance products is a ‘matter for individual insurers in which the government does not seek to intervene’.

She added: ‘The motor insurance market is intensely competitive and the government therefore expects that the insurance industry will pass on savings to consumers.’

The Association of British Insurers said it has no remit to set its members’ prices, but would rely on the competitive insurance market to keep premiums down.

A spokesman said: ‘Insurers have been delivering on their promise to pass on savings made to customers following the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act reforms.’

But research released from the comparison website Confused.com said car insurance premiums saw their biggest annual rise since 2011 in the final quarter of 2015.

Motorists are now paying on average £78, or 13.2%, more than they were this time last year, leaving the average premium for a comprehensive policy now at £672.

Tom Jones, head of policy at claimant firm Thompsons Solicitors, said the government has no intention of making the insurance industry do anything, instead relying on ‘volunteers’ to pass on savings.

‘Rather like Lord Nelson in the Battle of Trafalgar, the government "expects" the insurance companies to do the right thing,’ he said.

‘It’s one thing for Nelson to have expectations of those in uniform serving their country in the heat of battle but George Osborne needs to accept that it’s rather different when you are talking about insurance companies whose first master is their shareholder.’

Readers' comments (41)

  • Corruption. Why are we not having these people investigated?

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  • because it is very hard to get criminals to investigate criminals

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  • So the costs of litigation have fallen significantly but premiums have increased and yet we're told that if the costs of litigation fall further still then premiums will fall.

    Thank goodness my unicorn breeding business is taking off.

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  • Blatant corruption. Blatant.

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  • This government is morally bankrupt

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  • Great article. Shows all of this for what it is. Needs to be in mainstream media too.

    Reminds me of the Simpon's episode with the open-door prisons "Screw the honour system maaan"

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  • What Insurer donations to Mr C and the gang don't we know about. The above comments say it all. Please don't claim on your insurance, that would be a headache to us. Just keep paying, because you have to.

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  • The right question here is whether the proposed PI Reforms of themselves evidence breaches of sections 7.7 and 7.8 of the Ministerial Code 2015?
    I think it's beyond doubt that they do- the reality, which I suggest everyone in the legal world already knows, is that this Conservative government is trading off our historical held right to damages for pain and suffering for nothing more than continued Insurer donations and for individual MPs own self gain ( those 40 MPs that have declared interests in the Insurance Industry ). .
    It is an insult to every solicitor's intelligence for the Conservatives to say the reforms are justified as they will lead a motor policy insurance saving- per the above article the evidence on this is stacked against them and now it transpires that they will not even intervene to ensure the savings are passed on.
    This shows you the depth of conflict they are in with this issue.
    One would expect a competent Parliamentary Commissioner for Standards to already be investigating this.

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  • The question is why isn't TLS, APIL, MASS & etc getting anything in the mainstream media, it's not really very difficult. (I have ghosted something and should be in a red top near you soon)

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  • So, the price to buy off justice is fully laid bare....

    As a Tory voter this corruption disgusts me.

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