Insurers today insisted the government will have all the assurances it needs that savings from personal injury reforms will be passed on to consumers. Justice minister Rory Stewart has added an amendment to the Civil Liability Bill which gives details of the proposed mechanism for holding insurance firms to account.
The addition, which will be debated when the bill reaches committee stage next week, states that the Treasury could require insurers to provide information to the Financial Conduct Authority about the effects of legislation.
Firms would have to report the amounts they have paid in respect of personal injuries and the amount they might reasonably have expected to pay if the legislation had not been passed.
They would also give details of the amounts charged by way of premiums before and after the rule changes. These must be audited before being passed to the FCA.
By the end of March 2025, the Treasury must lay before parliament a report summarising the effect of the bill and give a view on whether and how individuals who are policy holders have benefitted from any reductions in costs for insurers.
The government has always insisted that policy holders should expect to see average premiums come down by £35 a year after the bill comes into law.
Speaking in the House of Commons on Tuesday during the second reading of the bill, justice secretary David Gauke said: ‘Not only have we had public assurances from insurance companies that represent 85% of the policies, but we will table amendments to the bill to ensure that we can hold those companies robustly to account, particularly given their public commitments.’
The Association of British Insurers today echoed those sentiments, saying the costs benefits of reforms will be transparent and open to scrutiny.
‘The proposed amendment to the Civil Liability Bill sets out a mechanism for insurers to demonstrate this,’ said Rob Cummings, head of motor and liability at the ABI. ‘If the bill proceeds in its current form, it will fix a broken system in the best interests of both insurance customers and taxpayers, and insurance companies are ready to provide the necessary evidence of their contribution to this.’