The House of Commons Transport Select Committee is to take yet another look at the insurance industry and the reasons for the high cost of car insurance. The review, which will focus on the issues of access to justice and reducing fraud, will consider:
- Insurers under settling claims (often before a medical report has been obtained);
- The information provided by insurers to third parties for cold calling and spam texts purposes;
- The cost of replacement vehicles;
- The cost of vehicle repairs;
- The proposed accredited whiplash panels.
The Transport Select Committee last published a report just under a year ago which was seen by many as persuasive in the Government deciding not to increase the small claims limit for personal injury claims. Such a move would have denied access to justice for many injured claimants who, even if successful in their claim, would have been unable to recover their legal costs. Those with a valid claim, but without the requisite knowledge and experience of bringing a claim through the courts, may have decided not to pursue the claim at all when they could not afford to appoint their own legal representation and when faced with insurers who undoubtedly could.
The Sunday Times (22 June 2014) reported that car insurance premiums are likely to rise by as much as 15% over the next 12 months. Over the previous two years, premiums fell as insurers reduced their prices to win market share, a strategy clearly unsustainable in the longer term.
Insurers cut premiums on the expectation of greater savings after lobbying the Government hard, leading to reforms to the way personal injury claims are handled and legal costs paid.
A sharp increase in the cost of premiums is likely to lead to more motorists shopping around for the best deal when their renewal notice arrives.