A leading figure at Britain’s biggest car insurer has urged the government to consider looking again at compensation awards for whiplash injuries.
Tom Woolgrove (pictured), managing director of personal lines at Direct Line, said it was ‘obvious’ car insurance premiums had fallen following reforms of legal costs.
But the only way to sustain the reduction, he told the Association of British Insurers (ABI) conference yesterday, was through a new approach to general damages for low-level claims.
'The big element still is the general damages we pay for claims – there is a genuine public policy debate about the rights of the claimant to damages versus the cost to everybody paying for premiums,' said Woolgrove.
‘We can take out all the fraudulent and exaggerated claims but [further premium cuts] will not happen unless damages come down.’
The call for a debate on damages echoes statements from the ABI about the government needing to look again at how much whiplash victims receive.
The sector wants to press home the message that reducing legal fees was only a mid-way point in cutting overall costs in the system.
Ministers are understood to be sympathetic to those wanting a discussion and are prepared to listen to those calling for reduced general damages.
At the same conference, Steve Sweeney, general manager for price comparison site moneysupermarket.com, said motor insurance premiums had come by 6% in the last year. The figure is even higher for the last quarter.
Significant savings for the consumer were a key stipulation of insurers set by the government ahead of its recent swathe of civil litigation reforms.
Meanwhile, the insurance industry has been warned by its regulator that consumers have little awareness of the motor legal expense insurance (MLEI) products they are sold.
MLEI is the most common ‘add-on’ to motor policies, typically sold at £25 to £30.
In its annual report for 2012/13 released today, the Financial Services Authority (which has since become the Financial Conduct Authority) said the products were useful in packaging together legal services.
But the report said explanation of the product needs to improve at all stages, with a further review taking place in a year to measure the progress made.