Whiplash Reforms Reduce Insurance Premiums
Following recent legislation back in April 2013 together with future Whiplash reforms are helping to cut Private Car Insurance premiums to a five year low, new reports confirm.
The motor insurance price index, produced with professional services firm Towers Watson, shows that average comprehensive premiums dipped below the Â£600 premium for the first time since 2009 in the first quarter of this year.
Prices have reduced by 7.5% over the last quarter and by around 19% over the course of the year â€“ bringing average premiums down by around Â£140.
The figures will be hailed by the insurance industry as proof that civil litigation reforms in 2013 have had the promised effect â€“ but they may also be used by the claimant sector to argue against further reform.
The government is committed to creating independent medical whiplash panels this year and has not ruled out increasing the small claims limit from the current Â£1,000 threshold.
Stephen Jones, UK head of pricing at Towers Watson, said competition between insurance providers has forced prices down, but changes to the legal profession are also having an impact.
â€˜Contributing factors could include optimism surrounding potential reforms in the medical assessment of whiplash and action which may be taken on third-party repair and hire costs.
â€˜Another factor to consider is that some insurers declared increased reserve releases when announcing their year-end results, perhaps indicating growing confidence in their understanding of the claims cost impact of recent legislative changes. including [the Legal Aid, Sentencing and Punishment of Offenders Act].â€™
On a regional basis, confused.com said policyholders in Manchester and Merseyside have received the largest average price cuts, amounting to 23% or a price saving of nearly Â£250.
Both were areas associated with high claims costs and so would be expected to see a greater impact from civil law reforms.
In 2013 the Ministry of Justice banned the payment or receipt of referral fees in personal injury and abolished the recoverability of after-the-event insurance premiums and success fees from the losing defendant party. The MoJ also reduced fixed fees for low-value Road Traffic Act (RTA)Â claims from Â£1200 to Â£500.