Corporate greed drives up car premiums—not a rise in claims

16 October 2024, 14:19

Reports show that UK car insurance is up by a third.

The huge disparity, in contrast to European counterparts such as France, where it has risen by only 2% raises serious questions about the motor insurance industry in the UK.

This is only further heightened by the fact that UK insurers have revealed the amount they paid for motor claims went up by about 18% last year.

Today, insurance bodies will meet with ministers and the Transport Secretary to crack down on the “spiralling” costs of car insurance. Following this, Transport Secretary Louise Haigh and Economic Secretary to the Treasury Tulip Siddiq will announce that a new motor insurance taskforce will be created.

This is directly linked to Labour's election manifesto, which pledged to further support drivers by tackling the soaring cost of car insurance as part of its automotive sector plan.

Insurers have previously been happy to have state involvement in the legal process (for example capping compensation and legal fees) so surely cannot cry foul if the government should now intervene in their business model.

While the response and ‘direct action’ is welcome, this taskforce must get to the crux of rising premiums. The Department for Transport has outlined that certain factors such as the car theft epidemic and rate of inflation are forcing insurance premiums up.

Ultimately, it’s a case of UK car insurance payouts lagging far behind the rising cost of cover with the reason behind this - insurers’ greed.

We are seeing this time and time again – recently, the UK Supreme Court unanimously rejected the challenge from insurers in a landmark whiplash case for motorists in another example of insurers, attempting to avoid or justify reducing payouts by using calls of ‘fraud’ and ‘overcompensation’.

The ABI have attempted to blame a non-existent compensation culture, changing the laws drastically to make it harder to claim, all the while premiums keep on increasing. Indeed, in order to justify removing the right to recover legal fees for whiplash claims insurers promised to reduce premiums by a paltry £35, but even this failed to materialise.

Our own research at National Accident Helpline has found that while injuries are increasing since the pandemic, claims are still winding down, due to factors including stigma around claiming and fears of the legal system.

We need to guarantee that insurers are being held accountable, not only to tackle inflated premiums but to ensure that claimants who are entitled to compensation to rebuild their lives, can and will.

Car insurance isn’t a luxury, it’s an essential and we need to ensure drivers are equipped with a fairer deal.

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John Kushnick is the Legal Operations Director of National Accident Helpline.

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