Insurers ‘taking the public for fools’
Car insurers have been accused of ‘profiteering’ by raising premiums while paying out less in claims for five successive years.
Figures obtained by personal injury law firm Thompsons Solicitors found that the amount insurers paid out in claims in 2015 was 30% lower than in 2010, falling from £8.3bn to £5.8bn.
Despite this, premiums have continued to rise, jumping 17.2% between July 2015 and July 2016.
Insurers have partly blamed these rises on escalating fraud surrounding personal injury claims, but Tom Jones, head of policy at Thompsons, believes this is ‘manufactured hysteria’, insisting the numbers don’t back up that argument.
He 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.’
The Association of British Insurers (ABI) has been lobbying for government to introduce personal injury compensation reforms to tackle what it describes as a whiplash epidemic. The government had announced plans to enforce stricter regulation which it said would save insurers up to £1bn a year. Insurers promised to pass 100% of those savings on to customers.
However, the government has stalled on implementing these reforms and is understood to have cooled on the idea, prompting an impassioned response from insurers urging action. It’s said it detected 70,000 fraudulent claims last year worth an estimated £800m.
Tom Jones said, ‘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.’