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Ministry of Justice: Car insurance premiums down £80 as government announce more measures to help hardworking families with the cost of drivingBack

WhiplashAs part of its plan to help hardworking people, the Government is today announcing measures to help motorists to cut the cost of running a car. These include a crackdown on whiplash fraud, a freeze on MOT test prices and a scheme designed to reduce the cost of fuel at motorway service stations, Justice Secretary Chris Grayling announced today.

Average motor insurance premiums have already fallen by more than 12% over the past year, equivalent to an £80 reduction on an average policy, thanks to Ministry of Justice reforms to no-win, no-fee deals and action on rogue claims firms – according to new statistics from the AA.

Justice Secretary Chris Grayling said:

“We are turning the tide on the compensation culture and helping hardworking people by tackling high insurance premiums and other motoring costs.

“We have already helped families by cutting income tax for 25 million people by raising their personal allowance, by freezing council tax and by helping with tax-free childcare for example. But we want to do more.

“It’s not right that people who cheat the insurance system get away with it while forcing up the price for everyone else – so we are now going after whiplash fraudsters and will keep on driving premiums down.”

He has announced today that:

– Whiplash cheats, whose bogus compensation claims have helped to force up average motor insurance premiums, will be targeted by new independent medical panels which will ensure only evidence from accredited professionals can be considered. This will mean people can no longer profit from exaggerated or fraudulent compensation claims but victims with genuine cases can still get the help they deserve. These will be introduced from next year.

– The statutory maximum price of the MOT test for a car will be frozen at £54.85 until 2015 – potentially saving up to £50m for drivers every year.

– Action will be taken on high motorway fuel prices. New comparison road signs will be trialled which will show prices at different service stations along a route, making it easier for drivers to get the cheapest deal and encouraging competition on prices.

– The fees charged for the driving test will be reviewed, including the current £31 for the theory test, £62 for the practical test and £50 fee for the provisional licence, to identify any opportunity to save money for the 1.5m car drivers who take their test every year.

Roads Minister Robert Goodwill said:

“The costs of owning and running a car are felt by millions of households and businesses across the nation. The Government is determined to help keep those costs down. That is why we are freezing the price for an MOT test and looking again at the costs associated with getting a driving licence.

“We also want to make it easier for people to get a better deal on fuel at motorway service stations, for instance through a trial of motorway signs that will show motorists the different fuel prices on offer on their route.”

New statistics from the AA show that motor insurance premiums are now falling at the fastest rate since 1994 – a fall of 12.3% in the year to October for an average comprehensive insurance policy, from £648 in October 2012 to £568 in October 2013.

New figures from the MoJ’s Claims Management Regulation unit also show that the number of claims firms in the market has plummeted by more than 1,000 following the law changes, from a peak of 2,553 in December 2011 to 1,485 last month. The firms are responsible for bombarding the public with adverts for profitable compensation claims.

Despite these successes whiplash claims remain an issue which Government will continue to fight. The number of claims has fallen since 2011 but there were still almost half a million whiplash claims in 2012. Insurers say these claims cost them more than £2bn in payouts and lead to an average premium increase of £90 for drivers. Each whiplash compensation payout costs an average of £2,400 insurers say, with an additional £2,000 in legal costs.

The Government will now work quickly with experts to implement the independent medical panels. This will include developing a scheme for accrediting medical experts who can assess whiplash injuries, enhancing the medical reporting process, improving information for medical assessments and carrying out spot checks to ensure quality.

Plans for improved data sharing by insurers will also help police, including the specialist Insurance Fraud Enforcement Department, to track down criminal fraudsters.

Notes

Prime Minister David Cameron pledged action to tackle high insurance premiums following a summit with the insurance industry in February 2012, where insurers committed to pass on savings to their customers.

Since then the Ministry of Justice has:

– Transformed no win, no fee deals so lawyers can no longer double their fees if they win, at the expense of defendants and their insurers.

– Banned “referral fees” paid between lawyers, insurers, claims firms, garages and others for profitable claims – which have driven the growth of compensation culture.

– Reduced by more than half the fees lawyers can charge insurers for processing basic, uncontested claims for compensation for minor injuries suffered in road accidents – from £1,200 to £500.

– Banned claims firms from offering cash incentives or gifts to people who bring them claims. Recommend a friend deals also banned, along with contracts agreed only over the phone.

The independent medical panels were proposed as part of a consultation on measures to tackle the number and cost of whiplash claims. The consultation, and the response document published today, are available here

The AA’s insurance update is available here

The Claims Management Regulation (CMR) update, and further information about the CMR unit, is available here

By committing to freeze the fee of a statutory MOT test for a car at £54.85 the Government has ruled out raising the price by around £4 a test. There are 35m MOT tests done every year, with about 12m of those being charged at the full fee – so this could be a significant saving of around £50m to Britain’s drivers.

The number of compensation claims are published by the Department of Work and Pensions Compensation Recovery Unit. Of the 820,000 motoring personal injuries in 2012/13, 480,000 were recorded as whiplash claims.

The number of reported road accidents are published by the Department for Transport here. These reduced from 189,000 in 2006 to 151,000 in 2011.

The £90 figure above was published by the Association of British Insurers. The ABI also report that in 2011 there were 45,000 bogus dishonest motor insurance claims detected. Savings of £441 million were made by the industry from the claims uncovered.

Posted by Leana Kell on 27/10/2013