Claimant representatives express reservations over the newly formed government taskforce aimed at addressing the escalating motor insurance premiums in the UK.
The announcement of the taskforce follows recent statistics from the Financial Conduct Authority (FCA) which reveal an alarming 21% increase in motor insurance premiums since June 2022. These figures starkly contrast with trends observed across other major European economies, prompting concern among claimant representatives about the approach being taken to tackle the issue.
Transport Secretary Louise Haigh and Economic Secretary to the Treasury Tulip Siddiq will lead the taskforce. They will collaborate with colleagues from multiple departments including the Home Office, Ministry of Justice, and more. Additionally, a stakeholder panel comprising industry and consumer representatives will support the taskforce, aiming to identify the core factors driving the premium surge and devise strategies to mitigate these costs.
Factors such as inflation, rising car thefts, and deteriorating road conditions, signalled by the government’s commitment to repairing potholes, are contributing to the premium increases. Direct action is being taken by the government to assemble insurers and regulators to confront these rising costs,” stated Ms Haigh.
The FCA has pledged its support by scrutinising claims costs, reviewing claims handling procedures, and analysing how different customer demographics are affected by the rising prices. Meanwhile, Association of Consumer Support Organisations’ (ACSO) executive director, Matthew Maxwell Scott, proposed that an independent review by the FCA and the Competition and Markets Authority (CMA) would be more effective. He questioned the involvement of the Association of British Insurers (ABI) in investigating its own pricing practices.
Concerns have been raised about the lack of transparency in insurer pricing, investment returns, and the profits accrued from monthly premium-paying customers. “At least the government is acting,” Mr Maxwell Scott conceded, emphasizing the importance of consumer group participation to ensure fair value at the point of claim.
From the perspective of the legal representatives, Andrew Wild of First4InjuryClaims highlighted the insurance industry’s tendency to attribute rising premiums to claims costs despite significant savings post-whiplash reforms. Mr Wild disputed the ABI’s call for extended fixed costs and stressed the necessity for transparency on the part of insurers.
Legal stakeholders have voiced the need for representation within the panel to clarify how insurers’ conduct can elevate claim costs. John Kushnick of National Accident Helpline criticised the ABI for alluding to a non-existent compensation culture while premiums continue to rise, calling for insurers to be held accountable for both inflated premiums and ensuring rightful compensation for claimants.
The establishment of this taskforce, though met with scepticism from various sectors, represents a proactive government effort to stabilise motor insurance premiums. Nevertheless, the concerns regarding transparency and the inclusion of diverse perspectives, especially legal voices, underscore the complexities of effectively addressing the issue.
