The Government has today announced that it is bringing together industry experts and consumer organisations in a task force to address the costs of motor insurance, calling it a major step forward in getting a fair deal for UK drivers by “rooting out the factors driving up costs for industry.”
Collaborative approach
The newly formed working group is tasked to “identify the factors behind rapidly rising premiums and will agree solutions to keep costs under control.” Factors specifically identified as driving up the cost of insurance include “inflation, rising car thefts and the country’s pothole-ridden roads…”
| Car insurance is an essential, not a luxury. It is vital to accessing economic opportunities and this government is committed to getting costs under control. That’s why we’re taking direct action to bring insurance companies and regulators round the table to discuss how we can crack down on spiralling costs.
The rising cost of cover affects all drivers but some groups have been hit harder than others. No matter your background or circumstance, this government is determined to ensure drivers get a fair deal. Our new expert task force is a major step forward in delivering a fair deal for drivers. It will give this issue the attention it deserves – rooting out the factors driving up costs for the industry and ensuring drivers are able to hit the road. Rt Hon Louise Haigh, MP, Secretary of State for Transport |
In addition to the Taskforce initiative, the FCA has announced a competition market study into the use of premium finance, to examine whether consumers who use credit to pay for motor insurance are accessing fair and competitive deals.
DAC Beachcroft says…
One must not lose sight of the starting point here. A period of stubbornly high inflation, ongoing challenges with the supply of parts, the repair of Battery Electric Vehicles (BEVs) and a negative Personal Injury Discount Rate (PIDR) in England & Wales are all contributing towards the cost of motor insurance. Motor insurers are not, in the main, making an underwriting profit.
On the issue of the PIDR there are signs of optimism, with the new rate set at 0.5% in Scotland and Northern Ireland. An early announcement of the new rate in England & Wales is likely to have a significant positive impact on the cost of claims.
Meanwhile, in the volume claims arena, inflation is eroding the benefits of the whiplash reforms, pushing innocuous minor injuries out of the Official Injury Claims (OIC) process and into a cost-bearing regime. There is a strong case for raising the Small Claims Track limit and indexing it to inflation.
