“Profiting From Motorists” report was published by Thompsons Solicitors
Admiral Group Plc, has on the 24 May 2013, released £120m in final dividend payments to its shareholders in the latest example of shareholders getting payouts that could be used to reduce premiums.
The total dividends paid to Admiral shareholders for 2012 now exceeds £245m.
This announcement comes just five days after the launch of a report highlighting deep-rooted hypocrisy within the car insurance industry, which insists it cannot reduce premiums for policy holders in a financially viable way.
The “Profiting From Motorists” report was published by Thompsons Solicitors on Monday (20 May 2013) to coincide with the House of Commons Transport Select Committee hearing on the cost of motor insurance. Thompsons examined the 2012 financial results of the UK’s major car insurers and challenged them to account for why policy holders were not seeing a reduction in premiums despite the huge financial gains being enjoyed by the market leaders.
Admiral reported profits from motor insurance
In 2012, Admiral reported profits from motor insurance at £372.8m. The analysis found that if the total dividend payment of £245m had been split between policy holders rather than lining shareholder pockets, the group’s three million UK policy holders would each have seen an £81 reduction on their car insurance premiums.
“Admiral’s latest pay-out to shareholders proves that – despite what the companies claim – motor insurance is profitable for insurers. If you believed the headlines – which the government appear to have swallowed hook line and sinker – you would think that insurance companies are losing money on car insurance and have no choice but to charge high premiums. The fact is, they are making huge profits that they could pass on as savings to their policy holders” says Head of Policy and Public Affairs at Thompsons, Tom Jones.
Addressing the Transport Select Committee hearing on Monday, a representative from insurance industry body Lloyd’s Market Association blamed the high premiums on an ‘entire industry that exists purely to help people make a claim’.
'Third party capture'
“There are people out there who encourage claims but the insurance companies are in on that game themselves. They ask policy holders who call up reporting a crunch if they have any injury and, if the answer is yes, they have been making money by passing the claim on to lawyers, its called ‘third party capture’ in the industry,” responds Tom Jones.
Thompsons argue that the insurance industry needs to do more to combat fraud and the claims companies they simultaneously criticise and support.
“Companies like Admiral keep saying that they are the victim of fraud and yet they are making millions of pounds in profit. If the insurers think a claim is fraudulent they should challenge it.
“They can spot the multiple claims coming in from certain companies or people and could dry up the dodgy companies cashflow overnight if they got their act together. If the problem is with churned out medical records then again the industry know who they are coming from and they could choose to challenge it.
“Challenge a few times and the fraudsters would be exposed, leaving others to think twice. To not actively challenge ‘fraudulent’ claims does not make sense unless, in fact, the industry is crying wolf and they are making money which our report shows is the case,” concludes Tom.
Putting a stop to hypocrisy within the insurance industry
Thompsons is challenging the insurance industry about the hypocritical arguments it makes about fraudulent claims and the negative effect this is having on injured people and victims of road accidents.
We urge you to contact your MP about this issue and have prepared this letter template as an example. Go to http://findyourmp.parliament.uk/ to find out who your local MP is.
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