Leading insurers have committed to give customers 100% of the savings made from new government reforms to help slash the cost of motor insurance - meaning annual insurance premiums could fall by around £50.
The agreement comes after a recent roundtable meeting - between the insurance industry and Ministers - to discuss the Chancellor’s Autumn Statement announcement that the government would end the right to cash compensation for minor whiplash injuries and raise the upper limit for the small claims court for personal injury claims from £1,000 to £5,000.
Whiplash claims cost the country £2 billion a year and add £90 to the average motor insurance policy. Previous government reforms have contributed to a fall in premiums of over 10% since 2012 and insurers have committed to hand over savings from these new reforms to the country’s drivers as quickly as possible.
Justice Minister Lord Faulks said:
We are determined to crack down on the culture of fraud and exaggerated claims in the motor insurance industry, which means car owners are forced to pay higher premiums to cover the false claims of others. This culture is boosted by an industry that encourages exaggerated claims through cold calling and it is right that we tackle this.
Insurers back these much-needed reforms and have committed to handing over savings to motorists quickly.
The detail of the plans will be consulted on early next year and the measures will be introduced as soon as possible.
James Dalton, Director of General Insurance at the Association of British Insurers, said:
The government reforms are a significant breakthrough in tackling the UK’s compensation culture and are good news for motorists. Reforms to the Small Claims Track Limit and the end to cash compensation, for low value injuries, will help to bring down unnecessary costs in the motor insurance market and honest motorists should be the beneficiaries.
Welcoming the announcement of the reforms in the Autumn Statement, Mark Wilson, Chief Executive Officer of Aviva plc, said:
We welcome this bold and necessary step by the government on behalf of honest people – it is all about standing up for the consumer against the fraudsters.
Let me be clear, Aviva will pass on 100% of the savings from this government initiative to our customers, reducing customers’ average premiums by around £40-£50 when it is implemented.
The government is putting the brakes on the whiplash gravy train. It is great news for consumers. Sadly, law abiding motor customers have paid for the UK’s dysfunctional and fraudulent motor claims system through inflated motor premiums.
John O’Roarke, Managing Director of LV= General Insurance, said:
We’re fully supportive of the government’s moves to crack down on the fraud and claims culture in motor insurance and will pass on all savings to customers.