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Rises in Motor Insurance Costs Attributed to a Growth in Personal Injury Claims

Monday, 16 January 2012

Motorists in the U.K. are likely to face a 40% increase in their insurance premiums this year, as the number of people claiming personal injury compensation continues to soar. This is despite recent Department for Transport figures which show that the number of people killed or injured on Britain's roads over the past decade has dropped by almost a third.

Recent trends in personal injury and compensation claims

In evidence presented to the Transport Select Committee, EMB, a leading actuarial consultancy, revealed the full extent of recent trends in personal injury and compensation claims.

Their report, which analysed data from the vast majority of U.K. insurers, highlighted the need for the insurance industry to tackle rising fraud, which the EMB claims "remains the major factor in motor insurance price rises".

The role played by Accident Management Companies

The report places Accident Management companies at the route of the problem. It is claimed that these companies are often tipped off by garages with which they have agreements in place. Subsequently the accident management company will take on the claim and bill the insurance company for an array of expenses such as doctor's fees, car-hire or compensation before adding on their own substantial fees.

One telling statistic to arise from the report shows that 20% of all UK motor insurance claim costs in 1990 were attributed to personal injury claims, whereas in 2010 the figure stands at nearer to 50%, leading the EMB to describe personal injury claims as "the biggest single factor in driving the increase in insurance premiums".

Personal Injury solicitors blame the insurance companies

In response to the EMB's allusion that tenuous compensation claims are heavily responsible for the rise in premiums, the Association of Personal Injury Solicitors vice-president David Butt switched the focus of blame onto insurance companies themselves by stating that:

"The vast majority of motor claims are now dealt with through a new process, introduced by the Government, which imposes fixed costs on the parties, so legal costs in these claims are lower now than they have been for years.

"The insurers should look closer to home for the answer, in the growing trend for them to pursue people who have been involved in accidents with their own policyholders"

Mr Butt was referring to the identified practice of insurance companies seeking to nullify the no-claims bonus of their own policy holders.