News story

Statement on outcomes following Downing Street Insurance Summit

Government sets out measures to tackle compensation culture, reduce legal costs and cut red tape.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Prime Minister met with the insurance industry, consumer and business groups today to discuss the rising premiums that many drivers, families, consumers and businesses are facing, and the action that the Government is taking to help bring these down.

There was a commitment from the Prime Minister that the Government will take action to tackle the compensation culture, reduce legal costs and cut health and safety red tape. The insurance industry committed to pass savings made on to consumers.

The Government and insurance industry agreed to work together in future to make progress on this.

Measures agreed include:

  • industry commitment to pass savings onto customers resulting from a Government commitment to reduce the current £1,200 fee that lawyers can earn from small value personal injury claims;
  •  industry committment to adjust premiums to reflect any reductions in legal costs created through the Jackson reforms that will reform ‘no win, no fee’ and ban referral fees; and extending the road traffic accident claims process to cover employers liability and public liability;
  • the Government and insurance industry committed to work together to identify effective ways to reduce the number and cost of whiplash claims. Options include improved medical evidence, technological breakthroughs, the threshold for claims or the speed of accidents. Progress on this will be made in the coming months;
  • to tackle the issue identified by the Red Tape Challenge of health and safety ‘myths’, insurers will provide short guidance to all clients at the point of purchasing insurance setting out clearly what SMEs need to do, and critically what they don’t need to do, to comply with health and safety law and get insurance cover, to ensure that businesses are not asked to go beyond what is actually required by law;
  • insurers committed to challenge more vexatious health and safety civil claims in order to tackle the compensation culture;
  • the Government and insurance industry agreed to work together to look at what more can be done regarding young drivers’ risk and safety. This includes the wider use of telematics or ‘smartbox’ technology. This monitors driving behaviour, giving young drivers the chance of affordable car insurance by adopting safer driving.


Britain is now the whiplash capital of Europe, with more than 1,500 claims a day, with people claiming for whiplash injuries sustained in the most minor of incidents; According to the ABI the cost to the industry from whiplash claims is £2 billion, adding £90 to the average premium;

The Government has already cracked down on uninsured driving, which puts at least £30 on the price of each premium, by making it illegal to own an uninsured car;

The Government is addressing the fear from businesses of being sued for trivial or excessive claims by extending the road traffic accident claims process, by increasing the value of the claims that go through it from £10,000 to £25,000, and extending the process to employer liability and public liability claims;

Committing to reduce the £1,200 fee that lawyers can earn from small value personal injury claims will help bring down the legal cost of many cases and deter the speculative health and safety claims being made;

Red Tape Challenge comments on health and safety legislation were fed into the independent Lofstedt Review. The Government supports Lofstedt’s recommendations and has committed to using the Red Tape Challenge process to go even further.

Some of the key commitments resulting from the Lofstedt Review are:

  • To exempt from health and safety law around 1 million self-employed people whose work activities pose no potential risk of harm to others.
  • The Health & Safety Executive (HSE) to review all its Approved Codes of Practice.
  • The HSE to undertake a programme of sector-specific consolidations, by the end of 2014 (including sectors such as Mining). 
  • Giving HSE the authority to direct all Local Authority health and safety inspection and enforcement activity, to ensure it is consistent and targeted at the most risky workplaces.

The average motor insurance bill today is £410 - a 17 per cent rise on last year. (ABI)

The average premiums for young drivers are £2,977 for a young male driver and £1,682 for a female driver (The AA)

Attendees at the Summit:

The Rt Hon David Cameron MP, Prime Minister
The Rt Hon Oliver Letwin, Minister of State, Cabinet office
The Rt Hon Justine Greening, Secretary of State for Transport
Nick Herbert, Minister of State for Justice Otto Thoresen, Director General, ABI
David Stevens, COO, Admiral
Trevor Matthews, Chief Executive, Aviva UK
Paul Evans, Group CEO, Axa UK and Ireland,
David Riches, Director of Ops, British Chamber of Commerce
John Cridland, Director General, CBI
David Neave, Director of General Insurance, Co-operative Insurance
Judith Hackitt, Chair, Health and Safety Executive
Paul Geddes, Chief Executive, RBS Insurance
Ann Robinson, Uswitch
Stephen Lewis, CEO, Zurich UK

Updates to this page

Published 14 February 2012