Whiplash curbs could hand insurers £1bn-plus profit boost

Topics: Personal injury & clinical negligence,Insurance

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Motor insurers would net an annual windfall exceeding £1bn from fresh curbs on the rights of injury victims – if the industry booked as profit the savings it says it will make from reform.

Industry data shows that the £50 per premium saving promised by the government could yield a massive boost to insurers' bottom lines.

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In his autumn statement, chancellor George Osborne pledged to end the right to cash compensation for minor whiplash injuries and raise the upper limit for personal injury claims in the small claims track from £1,000 to £5,000.

Over Christmas the Ministry of Justice announced that leading motor insurers had promised to pass on to customers 100% of the savings they make from curbs on whiplash claims – estimated at up to £50 per motor premium.

Last week, however, both the government and trade body the Association of British Insurers admitted there will be no industry audit to confirm that insurers keep that promise. This has inevitably led to concerns that there is nothing to stop insurers simply booking the ‘savings’ as extra profit – at a time when the average motor premium is soaring once again.

The ABI’s own statistics show that in 2012, the latest year for which data are available, 19.6m UK households had motor insurance. Multiplied by £50, and assuming that each household has just one premium, that would mean a potential boost to profits totalling £980m.

In fact the average household in Britain has two cars – suggesting the windfall could be hundreds of millions of pounds higher.

Readers' comments (43)

  • Aviva say fraud costs £90 per policy, and we all know that this is being done to curb fraud *snigger*, so actually that should be £,1,764,000,000.00+

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  • Your logic is flawed: nobody is suggesting that this will completely eradicate fraud

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  • So now, thanks to the insurers paying off the government, not only will I not be entitled to claim any compensation if I am involved in an accident that wasn't my fault - but I will still be paying the same amount of money for my car insurance.It is clear from the recent press releases that no one is going to "police" that these savings are handed back to the consumer. Seems legit.

    I have yet to see what action is being taken by MASS, APIL et all apart from a brief story on here that they were "communicating".

    I do hope that the Govt do not live to regret this decision as more and more people join the Dole Queue as a direct result of these decisions. Plus the black hole of tax input from both Claimant and Defendant firms who will now be submitting less profits on their paperwork.

    Yet again, a poorly thought out, knee-jerk decision undertaken by our Government to appease their insurer donators.


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  • This Country's Watergate.

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  • My prediction is that the reforms will come in...the insurers will not pass it on and profit for a couple of years. Then the government will add additional tax to the insurance industry to go into the public coffers leading to a positive image for the government tackling 'fraud' in the litigation process AND earning money for the public coffers. Its a vote winner if ever I saw one (for the uneducated) but the insurers will not care as they'll keep most of the profit.

    It only matters if you're injured at a later date. Until then, the public will not care.

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  • According to confused.com, premiums rose by 13% in 2015, equivalent to £78 per policy and by 7% alone in the last 3 months of 2015. Now call me cynical but could this be to enable the insurers to reduce premiums 12-18 months hence by this mythical £40=£50 without profits being impacted at all?

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  • £1 billion income less £9.7m investment in to Conservative party = net return on investment for insurance industry of £990.3m. Pigs, snouts and troughs.

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  • It's all well and good preaching to the already converted! Exactly what are our professional bodies and groups doing to fight this? I don't see any press campaigns being launched to challenge this and spread word of the injustice. It seems that if solicitors (and I am one) cannot fight their own corner, why should they be in existence? I would try and do it myself if I wasn't already too busy earning a derisory level of fees for the amount of work that I actually do.

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  • MHG will lose 9.5% of any reduction in premium collection + the knock on reduction from LEI, ATE,sols PII, + employers NI, PAYE & etc & etc.

    Of course the premiums won't fall as prmosed.

    I know where Wally is but where are TLS, MASS & APIL hiding, why aren't they putting the bonkers aspects of this proposal out there?

    The profession is being sold down the river and our 'leadership' would be regarded as shambolic by one Mr Corbyn.

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  • I think the view that estate agents will be put off doing conveyancing by the cost of PI is over optimistic. Surely they will set up a limited company which can be closed if a large claim is made or, more likely they will simply farm the work out to a mug solicitor willing to work for peanuts and take all the risk. After 40 years in the profession I've come to the conclusion solicitors are their own worst enemy. No one undervalues what we do as much as we do. Time to retire

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