Insurers blaming ‘fraud’ for increased premiums challenged to answer questions
Car insurance claims costs have fallen again in 2015 – the fifth consecutive year of falling costs – and were more than 30% lower than in 2010, giving the insurers a £2.5 billion windfall.
Car insurers have tried to focus attention on a ‘fraud crisis’ but data belatedly published by the Association of British Insurers (ABI) following pressure from Thompsons Solicitors has shifted the spotlight.
Given the plummeting costs yet continued increases in premiums campaigning law firm Thompsons Solicitors is challenging the UK motor insurance industry to answer fundamental questions about how it operates during today’s Association of British Insurers’ Motor Conference 2016 (18 October 2016).
Tom Jones, Head of Policy at Thompsons Solicitors said: “This latest information that has been sat on by the ABI completes a picture they would rather not have out there - of a booming industry with healthy profits and cash reserves paying out huge dividends. This isn’t a sector buckling under the weight of ‘fraud’ as they would want the British public to believe.”
Thompsons wrote to the ABI on 23 September 2016 asking why its annual general insurance overview statistics for 2015 had not been published in July/August as they normally are.
The ABI replied saying “we have never set out a commitment that the GIOS [General Insurance Overview Statistics] report is published in any given year or a timeframe for publication.”
The ABI data, which has now come to light, shows the amount paid out annually by motor insurers has fallen from £8.302bn in 2010 to £5.796bn last year – a decrease of £2.506bn.
At the same time as costs have reduced, premiums have gone up. In September 2015, the average quoted premium for an annual comprehensive car insurance policy was £629, an increase of 8.1% over the year before.
Mark Wilson, chief executive of AVIVA, said in The Times on 21 December 2015 proposed changes in last year’s Autumn Statement – now being reconsidered by the government - would “end the fraud pandemic”. Other senior figures have talked of ‘a crisis’.
Tom Jones continued: “If there is fraud it should of course be tackled but the issue is being cynically manipulated. Fraud is being repeatedly used as a battering ram for reform that would actually mean only more profit for insurers. The insurers are taking the British public for fools – they haven’t defined fraud, they haven’t provided any independent evidence that it actually exists at the levels they claim and they aren’t reporting it to their shareholders as a ‘material risk’.
“In our view fraud is being cynically exaggerated to attack the rights of honest motorists and to justify premium increases. It’s high time the insurance industry stopped their manufactured hysteria about fraud and concentrated on providing greater transparency so consumers can see if the ever growing premiums are justified.”
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