Who is to blame for record high car insurance?

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The cost of car insurance premiums is all too familiar to motorists around the country.  Recent years have seen premiums increase, hitting not only record levels last year but increasing at more than five times the rate of inflation, according to the Association of British Insurers (ABI).

ABI blame personal injury claimants for rise in car insurance premiums

The question of why premiums have gone up so much is much debated. The ABI, and others, have suggested that personal injury claimants are to blame. More recently, they are blaming government tax and the changes to the way the discount rate is calculated in serious injury cases.

These claims by ABI and others are simply not borne out by the facts, as discussed previously by our lawyers The truth revealed: why insurance premiums are really rising

It is true that claims for personal injury involve a higher pay out than the average paid out across all claims made on motor insurance policies. However, this includes compensation for those involved in the most serious of road traffic crashes, who are left with life-long disabilities through no fault of their own. 

Personal injury compensation helps the most injured

Our client Scott Sutherland was left with a traumatic brain injury at the age of 19 after a road traffic accident. He has problems with memory, speech and his temper - it is very unlikely he will able to work in the future. The compensation helped improve his recovery by making it possible to undergo rehabilitation earlier on and gives him financial security for the future. 

Evidence suggest insurers are to blame for higher premiums

Meanwhile, profits have increased at the major insurance companies and a recent media investigation uncovered evidence that insurers are artificially inflating repair costs, increasing the premiums for all drivers. 

The Daily Telegraph, who investigated and published the story, estimate that such practices could be creating a ‘hidden layer’ within the insurance market worth up to £750m, or 5% of the total premiums paid by 34 million drivers across the UK annually.

Before the recent general election, the ABI called on whichever party was successful to take steps to reduce the cost of car insurance. The evidence is clear that the insurance industry itself could take significant steps to reduce the burden on motorists. Whether the big insurance companies have any interest in doing so will remain to be seen.

At Digby Brown, our specialist solicitors help people who have been involved in road traffic crashes on our roads. Motor insurance is compulsory and allows people whose lives have been irrevocably changed by a road traffic crash to pursue compensation for the injury and loss they have suffered. 

The debate around the increased insurance costs faced by motorists all too often hides this and the simple truth that there is no evidence to link rising premiums to personal injury claims. Instead, the true reasons are to be found in the practices of the insurance industry themselves.