Despite the number of accidents in the UK falling this year, the number of drivers and passengers seeking personal injury compensation has been increasing.
The increase in car acident claims have been prompting insurers to increase premiums in order to recoup growing legal costs. The motor insurance sector has indicated that there may be as much as a 40 per cent rate hike in order to counteract the costs of rising traffic accident claims.
The scope of the problem was made clear to the Transport Select Committe by leading actuarial consultants EMB in a recent report. MPs responded by calling on the insurance industry to increase efforts to discourage fraudulent personal injury claims, as such behaviour was considered to be a major contributor to insurance cost increases.
In addition the MPs stated that insurance costs were being heightened by what they called a ‘merry-go-round’ of post-crash referral payments. Accident management firms are often given the nod by garages, work to take the case over and charge insurers for many expenses that could include compensation, doctors’ fees, and car hire costs. Costs are increased atop that by the fees charged by the accident management firm for its services.
EMB’s data analysis revealed the scope of the problem, as it contained information that had been provided by an overwhelming majority of insurers doing business in the UK. MPs were told that EMB found that the single largest driving factor affecting premium increases in the industry could be attributed to the rising cost of personal injury claims.
EMB estimated that two decades ago, only 20 per cent of insurance claims costs could be traced to such personal injury claims. Now the proportion has risen to be 50 per cent according to 2010 figures.