Car insurers should be given a deadline to reduce premiums substantially – or face a windfall tax, says a leading law firm following the publication of the Transport Select Committee’s report on ‘whiplash’ (31.7.13).
Thompsons Solicitors – which refuses to take part in the merry-go-round of referrals between the insurance industry, claims companies and some lawyers – says the report highlights the fact that car insurers could tackle fraud without reducing access to justice.
The firm believes its recently published data on the profitability of major insurers such as Direct Line and Admiral shows they have the financial means to reduce premiums immediately.
“It is good to see MPs challenging the car insurers and questioning their ‘whiplash capital of Europe’ claims,” says Tom Jones, Head of Policy and Public Affairs at Thompsons. “Instead of having such a fawning attitude to the insurance industry, it’s about time the Government produced reliable data on road accidents and invested more in road safety.
“We welcome the key points made by the Transport Select Committee and call on them to set a clear timetable for a reduction in the cost of motor insurance.
“The car insurers have no excuse. They make hundreds of millions in profits and could easily pass some of this back to motorists. If they refuse to do so, there should be a windfall tax on their profits in the same way as the banks were penalised in the past.
“We’ve heard endless talk recently about whiplash fraud, but as the Transport Select Committee rightly says there is no reliable data to substantiate the extent of this.
“And the insurance companies have themselves fuelled the problem by making offers to personal injury claimants even before a medical report has been received in order to put people under pressure to accept a lower settlement than they would get if they had legal support.
“The Transport Select Committee is absolutely right to say that access to justice could be impaired by Government proposals to switch whiplash claims between £1,000 and £5,000 to the small claims court. We agree that this will deter people who do not feel confident to represent themselves against insurers who will use lawyers to contest claims.”
The Transport Select Committee Chair, Louise Ellman MP, said: “The Government has claimed that the UK is the ‘whiplash capital of the world’, but without reliable data on road accidents we cannot say whether that statement is true or not.
"Many claims are genuine and relate to real injuries which can affect people for months or years. In the debate about how to reduce fraud and exaggeration, genuine claimants should not be demonised simply because their condition cannot be picked up on a scan."
Thompsons’ analysis of the 2012 financial results of the major car insurers – ‘Profiting from motorists’ – found that all of the top five car insurers had increased their profits in 2012.
The key findings of the Thompsons analysis were:
- Market leader Direct Line, which owns the Churchill brand, saw profits from car insurance rise last year to £262m (2011: £255m). It paid £101m in dividends to shareholders on June 11 – equivalent to £25 per policy holder.
- Admiral made a profit from the UK car insurance market of £372.8m in 2012 - a 19% increase on the previous year. Its UK car insurance profits were actually higher than Admiral’s overall profit, due to losses in overseas markets. Admiral increased its total dividend pay-out to shareholders by 20% to £245m – equivalent to £81 per customer.
- AVIVA does not give a separate profit figure for car insurance, but its 2012 annual report says: “Personal motor premiums increased by 3% to £1,164 million (2011 £1,126m) and we have nearly 2.5 million personal motor customers, an increase of over 250,000 since the start of 2012. We continue to deliver good profitability in personal (motor insurance) lines.”
- AXA UK & Ireland, part of global French-owned group, does not publish separate accounts, but it issued a statement on 21 February saying: “Motor profitability improved in 2012, thanks to pricing and risk selection actions.” It said it expects ‘improved results in 2013’. AXA has been particularly active in lobbying the Government for reforms to deter claims.
- Liverpool Victoria, the fifth largest car insurer, saw its profits rise 11% in 2012 to £29.5 (2011: £26.5m).
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. Go to http://findyourmp.parliament.uk to find out who your local MP is.
Injured on the roads? Help and compensation is close at hand.
If you’ve been injured on the roads in the last three years, Thompsons Solicitors' expert road traffic accident solicitors can support you with making a road traffic compensation claim.
Whether you were the driver or passenger in a car, lorry, coach, van, bus, truck, on public transport or were injured as a pedestrian or cyclist, you may be able to claim for damages.
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