OFT call for evidence into cost of motor insurance an “opportunity to highlight increasing cost pressures for insurers,” say ABI
Commenting on today’s announcement by the Office of Fair Trading (OFT) of a call for evidence into the cost of motor insurance, Otto Thoresen, the ABI’s Director General, said:
“This will give the industry another opportunity to highlight the cost pressures motor insurers are facing, what action is needed to reduce them, and steps the industry is taking to ensure customers get the best deal when buying motor insurance.
“Rising claims costs from personal injury claims and excessive legal costs, insurance fraud and uninsured driving, coupled with lower investment returns in recent years, have unfortunately led to rising motor insurance bills for many customers. In fact the motor insurance industry has not been profitable for the last sixteen years.
“Insurers are acutely aware of the impact that higher motor insurance premiums have for their customers. This is why the industry is doing everything possible to reduce costs, for example by campaigning for compensation reform to tackle excessive legal costs and frivolous claims, and setting up the Insurance Fraud Register to further reduce fraud”.
Cost pressures impacting on motor insurance include:
· Personal injury claims. The number of bodily injury claims received by insurers rose by 72% between 2002 and 2010
· Excessive legal costs. For low value personal injury motor accident claims, for every £1 insurers pay in compensation, a further 87 pence is paid to claimant lawyers. UK consumers pay £2.7million every day to claimant lawyers through their motor insurance premiums – that is 10% of every motor premium.
· ‘Crash for cash’ staged accidents and other insurance frauds, including fake whiplash claims. Last year insurers detected 40,000 fraudulent motor insurance claims worth £466 million.
· Uninsured driving. The cost of compensating the victims of accidents involving uninsured drivers is £500 million a year, paid for by honest motorists through their insurance premiums.
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Notes for Editors
1. Enquiries to:
Liz Forster 020 7216 7444 (Mobile: 07717 578 586)
Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
Linsey White 020 7216 7415 (Mobile: 07939 126 553)
Katherine Riviere 020 7216 7514 (Mobile: 07725 372 636)
2. The ABI is the voice of the UK’s insurance, investment and long-term savings industry. It has over 300 members, which together account for around 90% of premiums in the UK domestic market.
The ABI’s role is to:
– Be the voice of the UK insurance industry, leading debate and speaking up for insurers.
– Represent the UK insurance industry to government, regulators and policy makers in the UK, EU and internationally, driving effective public policy and regulation.
– Advocate high standards of customer service within the industry and provide useful information to the public about insurance.
– Promote the benefits of insurance to the government, regulators, policy makers and the public.
The UK insurance industry is the third largest in the world and the largest in Europe. It is a vital part of the UK economy, managing investments amounting to 24% of the UK’s net worth and contributing the fourth highest corporation tax of any sector. Employing over 275,000 people in the UK alone, the insurance industry is also one of this country’s major exporters, with a fifth of its net premium income coming from overseas business.
Insurance and businesses protect themselves against the everyday risks they face, enabling people to own their own homes, travel overseas, provide for a financially secure future and run businesses. Insurance underpins a healthy and prosperous society, enabling businesses and individuals to thrive, safe in the knowledge that problems can be handled and risks carefully managed. Every day, our members pay out £155 million in benefits to pensioners and long-term savers as well as £58 million in general insurance claims.
3. An ISDN line is available for broadcasts.
4. More news and information from the ABI is available on our web site, www.abi.org.uk.
Malcolm Tarling MCIPR
Senior Media Relations Officer
T: 020 7216 7410
M: 07776 147667
Association of British Insurers
51 Gresham Street