A select group of cross party MPs , the Transport Select Committee, have been reviewing the rising costs of buying car insurance and have come down heavily on Whiplash claims as the major contributing factor.
The Committee has published its Twelfth Report of Session 2010–12, Cost of motor insurance: follow up (HC 1451) and you can download the full report from the committee’s website.
The Report criticises the ease of claim for an ‘unprovable condition’ and points out the wide proportional disparity between the rising number of claims and the number of car accidents.
Number of Claims
| 2000-05 average | 2005-06 | 2006-07 | 2007-08 | 2008-09 | 2009-10 | 2010-11 |
| 395,735 | 466,097 | 518,821 | 551,905 | 625,072 | 674,997 | 790,999 |
Number of casualties in road accidents
| 2000-04 average | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
| 301,529 | 271,017 | 258,404 | 247,780 | 230,905 | 222,146 | 208,648 |
Conditional Fee arrangements also known as ‘no win, no fee’ arrangements are blamed for this increase.
The committee points out that while many claims are genuine there is a lot of evidence that proves fraudulent claims such as ‘cash for crash’ staged accident scams .
The genuineness of claims for whiplash injuries, is hotly contested by the committee. Around 70% of car insurance personal injury claims arise from whiplash injuries to which there is often no objective proof of the injury. The committee propose to ask Parliament to change the law both for claims for whiplash and to make changes to the claim referral fees system.
Regarding Whiplash claims the report states:-
Where someone can demonstrate that they have suffered an injury, including whiplash, as a result of a road traffic accident for which they were not fully liable they should be able to claim and receive compensation.
However, in relation to whiplash, we are not convinced that a diagnosis unsupported by any further evidence of injury or personal inconvenience arising from the injury should be sufficient for a claim to be settled. In our view, the bar to receiving compensation in whiplash cases should be raised. If this were possible by means of an insurer taking a case to court and establishing new case law we suspect this would already have happened.
We note the Government’s argument that its legal reforms should reduce the money in the system and encourage insurers to defend claims more vigorously. If the number of whiplash claims does not fall significantly once these changes are implemented there would in our view be a strong case to consider primary legislation to require objective evidence of a whiplash injury, or of the injury having a significant effect on the claimant’s life, before compensation was paid.
Car Insurance Blog welcomes the changes proposed which should alleviate the pressure on the mounting claims reseverves that must be held by each car insurer to deal with future losses. However in return the British car buying public will expect to see much cheaper car insurance and the savings not going to shareholders!
Otherwise the Governements exercise will have been pointless!
For learner drivers under 25, the ABI has called for a minimum one-year learning period before taking the driving test and a ban on taking inttensive driving courses where they are the only means of learning to drive (see below for full list of proposals).
The ABI recommends newly-qualified drivers under 25 should hold a ‘graduated’ driving licence for two years, at the end of which they would be tested again. Under the graduated licence there would be restrictions on passenger numbers and on driving between 11pm and 4am.
Car Insurance blog notes that interestingly the ABI have had to toe the European line and be selective with their statistics.
How they would like to point out that the bulk of the young drivers at fault are in fact Male, a rating factor that is no longer applicable in the pricing of car insurance from January 2012!
ABI News Release
ABI sets out ‘tough love’proposals to cut young driver road accidents and reduce their insurance costs
Young novice drivers should not be allowed to drink any alcohol while driving and be restricted in the hours when they can drive under radical proposals set out today by the ABI to cut the high level of deaths and serious injuries involving young drivers. Young drivers aged under 25 are twice as likely to fail a breathalyser test and more at risk when driving late at night and early in the morning.
One in four people killed or seriously injured in a road crash is a young driver or one of their passengers, yet drivers under age 25 account for only 12% of all driving license holders. Every day 2 people die and 16 people are injured in road crashes involving drivers under 25. Young male drivers are especially at risk, being five times more likely to be involved in a crash than 30-59 year old males.
“Our proposals are not designed to drive young drivers off the road, but to ensure that they become safer drivers. We must act to reduce the tragic loss of young lives on our roads”, stressed Nick Starling, ABI’s Director of General Insurance and Health.
The ABI wants to see for learner drivers aged under 25:
• A minimum one-year learning period before taking the driving test. A minimum learning period applies in many other countries.
• A ban on taking intensive driving courses where this is the sole means of learning to pass the driving test. This would enable learner drivers to gain experience in a wider variety of road conditions.
For newly-qualified drivers aged under 25:
• All new drivers should hold a graduated driving licence for two years, at the end of which they should be required to pass a second test to ensure that they are safe to drive on all types of roads.
• The graduated driving licence would contain restrictions on the number of passengers that could be carried. This reflects the significantly increased accident risk when other passengers are in the car. It would also include restrictions on driving between 11pm – 4am, albeit with certain exemptions, such as where driving is necessary due to work.
Nick Starling added:
“While recent years may have seen a reduction road accident fatalities and serious injuries the figures are still too high. Every young driver statistic is a tragedy. Whether it is inexperience, youthful bravado or sheer recklessness we need tough action to better equip young drivers to handle the dangers of driving.
“Insurers are actively doing this through the increasing use of in-car ‘black box’ technology which encourages responsible driving and ensures that the cost of motor insurance reflects the actual risk. But we need the Government to play its part through an overhaul of how we teach young people to drive.
“Young drivers pay more for their motor insurance because their accident risk is not only high, but because accidents that they are involved often involve very costly claims for personal injuries. So helping them to be safer drivers and reducing their accident rates will mean they will pay less for their motor insurance in the long run.”
Many lady drivers in the UK are currently angry that they will face much higher car insurance premiums in the New Year, when the EU directive on gender equality in insurance rating , comes into force.
The law which prevents car insurance being calculated using actuarial rates determined by gender, will see all women drivers, but especially those new or young drivers, pay a lot more in premiums. It will also see many specialist lady driver policies disappear.
Effectively the EU are saying that is wrong to blanket punish all male drivers with higher premiums, simply because as a set, they cost insurance companies more in claims. This is the price of equality!
Compare this Ladies to Saudi Arabia, where you face ten lashes simply for sitting behind the wheel of a car, and where you cannot buy womens car insurance!
Saudi Arabia is the only country in the world that bans all women , including foreign visitors from driving.
Since June 2011, hundreds of female drivers have been defying the ban, and presumably are driving uninsured, breaking the law designed to stop them from going out and committing sin!
Equality protestors have been arguing that even Mohammed’s wife rode a camel and donkey. Currently if women in Saudi Arabia want to go out, they have to employ a male driver or family friend to drive them. Taxis are also No No’s!
Yesterday a Saudi woman was sentenced to 10 lashes with a whip for defying the country’s ban on female drivers. Shaima Jastaina, in her 30s, was found guilty of driving without permission. She has appealed the verdict.
It is the first time a whipping punishment has been handed down for a violation of the longtime driving ban in the ultra-right Muslim nation. Women drivers are usually stopped and interrogated if caught behind the wheel,but let go if they pledge not to drive again on fear of the whip.
Aston Martin is the Coolest Brand
Aston Martin has been awarded the coolest brand winning both the automobiles/cars brand class and the overall coolest brand title, beating the likes of Apple and Rolex in the annual Coolbrands Awards.
How did Aston Martin get its Name?
Aston Martin have been building bespoke sports cars and coupes since the company was formed by Robert Bamford and Lionel Martin in 1913.
The company’s very first car was a one off competition machine using a 1400cc four cylinder Coventry-Simplex engine grafted into a a 1908 Grand Prix Des Voiturettes Isota Fraschini Chassis.
The name of the car – Aston Martin – was evolved from wealthy Kensingtonian Martin’s earlier successful jaunts at the Aston Clinton hill climb event in Buckinghamshire, in his 10hp Singer.
The name has now gone on to be the cooolest on the planet!
At Car-Insurance.tv we offer one of the largest bespoke Aston Martin car insurance schemes and online comparison systems for both current Aston Martins and Aston Martin Classic Car Insurance like the cool DB5 below!
Every driver should know and anyone who watches the F1 Grand Prix will know the importance of tyres, yet according to UK tyre retailer HiC about 42% of the tyres that they see getting changed are illegal.
The illegal faults noted include excessive wear, flat spots, cuts, impact damage and camber wear due to incorrect pressures or balance.
Car Insurance blog’s local KwikFit manager confirmed the statistics and pointed out that this was an example of how the recession was putting peoples lives at risk. He said that both sales volumes were down and most of the tyres they changed were either near the limit or beyond it. He also pointed out that it wasn’t just drivers of old bangers that were culpable but illegal tyres were common across the complete range of vehicles they saw.
In the UK the minimum legal tread is 1.6mm which must exist across 75% of the tyre surface. 1.6 mm is approximately equivalent to the edge of a pound coin.
It is illegal under the Road Traffic Act to drive with a bald tyre, one of which will get you three points on your licence and a fine. If you are caught with four bald tyres then you can expect an instant ban and a fine of anything up to £2500.
It is also a condition of all motor insurance policies that the insured vehicle is kept in a legal and roadworthy condition for cover to be effective, so clearly there are thousands of people driving around in the UK whose car insurance is invalidated by the state of their tyres. In the event of an accident or a claim many people could be in for a nasty shock!
Last Friday the coalition UK Government announced that it intends to outlaw the practice of accepting a fee in return for passing on information of road traffic accident victims to solicitors, the so called ‘referral fee’.
Car Insurance premiums have been rising all year as the market hardens to adjust claims reserves.
A recent AA report of 40% additional costs to the average premium has sparked investigations into the industry by the FSA and OFT. On the same day as the announcements of the investigations are made the Government also announce that referral fees are to be banned.
To be fair, the OFT has been investigating anti-competitive practices and price fixing in the UK Motor Insurance market for nearly two years now, however since the ex-Justice Minister Jack Straw called claims management companies ‘pariahs’ and ambulance chasers in June this year, the association of higher car insurance premiums and the rising costs of claims, has been firmly established in the UK public’s psyche.
On further investigation by the British media it turns out that insurance companies themselves are the major benefactor of the referral fees and also the major provider of the personal data to the third party companies!
When insurance companies refer your data to an accident claims management company they receive anything up to £1000 per case. Because the fees cannot be awarded against the losing party, the cost of the fees is paid for by the accepting solicitors and cannot be recovered from the losing liability insurers. Effectively there is no subrogation of the costs and selling your data is a win-win situation for all the underwriting car insurance companies.
Admiral Insurance, which has many online faces including confused and elephant, has stated that because referral fees account for 6% of their profits, any ban will inevitably lead to higher car insurance premiums.
Paradoxically though it has been the major insurance companies that have been moaning about CFA’s and no win no fee solicitors for years in the industry press, enough to have sparked two major judical reviews.
So on the face of it, car insurance companies seem to have cut off their noses to spite their faces and the ban will almost certainly lead to higher car insurance premiums. The problem is that referral fees are only a symptom of the claims losses and not a component of the claims loss itself.
The Government obviously and mistakenly feel that if you remove the fee for ‘advertising’ or facilitating, then you will reduce the demand in the market. Car Insurance Blog believes this is very naive!
If people are injured then they will claim. The real problem with the rising cost of motor insurance claims is the total cost of whiplash claims and the hourly charges of civil solicitors, both of which should be capped at levels much lower than current.
Is Car Insurance Cheaper Over The Phone?
With so many factors affecting the price of car insurance this year, it makes a change for Car Insurance blog to report that cheaper car insurance may just be a minute or so away.
An interesting post from Car Insurance Buzz, the car insurance news site, is suggesting that it is cheaper and quicker to dial a number and talk to someone about your car insurance needs than typing for hours on a computer trying to compare car insurance quotes from the same providers.
Whats more, Buzz points out that you can always haggle extra cover or a cheaper premuim than the one you’ve found online when you talk to a broker over the phone.
Buying Car Insurance On The Phone For Cheaper Cover
Today, as well as car insurance comparison sites for the confident web user, some individuals still prefer to telephone for motor insurance. People like to talk. It could even be argued that getting covered on the phone is the smart way to buy car insurance today and the cheapest method…
When car insurance call centres were first established many were located in remote areas around the country and insurance companies did not have a local call centre in every town and city. Calling one of these call centres if not local on a local charge rate could work out expensive and this put many people off purchasing motor insurance over the telephone. Prior to this drivers had been accustomed to a face to face purchase over a insurance brokers or insurance company counter, located locally to where they lived.
Local rate and 0800 free car insurance telephone numbers were established to overcome this, but the insurance companies running the call centres found that the numbers were being abused by false purchasers, time wasters and lonely people. As the call was free people could stay on the telephone for as long as they wanted and ask as many questions as they liked.
To overcome this and reduce time wasted by call centre staff, set scripts were designed that led the customer through the quotation and sales process. The staffs telephone script was adapted to finish the call if the caller was not suitable or the insurance company were not able to provide cover so for example if it is a stipulation of the cover that the insured to be does not have more than two accidents and the caller reports three, the member of staff can cut the call there and say that they would not be able to help. If the insurance company posed this question to the customer early in the call, this solved the problem!
Modern UK telephone call centres are now cheaper and well established. The technology used is now more efficient and integrated with the insurer’s back office computer systems for cost and time savings. Insurance companies have learnt the lessons of selling direct to the public over the telephone by staffing the telephone lines correctly when television or press campaigns are on.
As the price of call centres and complex phone systems became more affordable, insurance brokers have also invested in their own call centres, in order to provide a more efficient and extended opening time to their new and existing customers.
One such national broker with access to over 100 different car insurance policies is Adrian Flux Insurance, whose call centre offers more choice than the largest online car insurance comparison site. The call centre can be reached for free on 0800 0890182.
Call centres have had their problems, especially those major banks and insurers that moved their main call centres abroad to reduce costs. Fortunately now you have a choice of ringing either a local broker, national broker or insurance company to arrange cover.
Buying car insurance on the telephone can be done from anywhere today with mobile phones. The process is quick and easy and you know that you have the correct cover for your circumstances at the end of the conversation. It is also worth noting that when discussing the premiums for your cover on the phone, it is an accepted practice to negotiate and haggle for a better price than you have found elsewhere. You also have the knowledge that if you need to make a claim, a human being will be on the other end of the line when computer says no!
With the price of car insurance firmly on the media and political agendas, the BBC has weighed in again today with a report that uninsured driving is adding £30 to the price of every car insurance policy!
With so many contributing factors to the hike in car insurance premiums prices this year by 40%, it is a wonder if anyone is paying the true price of cover.
As we’ve been reporting here at car insurance blog for a few years now, uninsured drivers and the contributions that the insurance companies have to pay each year into a fund to cover uninsured losses, have been on the steady increase despite the introduction of the Motor Insurance Database (MID) and criminal convictions. The first excuse that the insurance companies gave in answer to why car insurance premiums were rising back in 2008, was to blame uninsured driving.
The BBC confirms the Motor Insurance Bureau’s (MIB) estimate that there are 1.4 million uninsured drivers on the streets of Britain.
In Bradford, the worst hotspot of uninsured driving in the UK, the number of uninsured drivers is incredibly seven times the national average!
Bradford Police report that uninsured drivers often cause accident and injury and fail to stop at the scene, costing hours of police time.
The BBC again makes the connection between uninsured drivers and young drivers and interviews a girl called Leah who sayas the best quote she could find on a car insurance comparison site was for £5000 and one was for an incredible £53,000!
This is why we are all paying more for our cover says the girl, who justifies young uninsured drivers as being priced out of the market.
A spokesman for the MIB said that the MID has been succesful in reducing uninsured driving by 25% which has been taken account in the car insurance pricing structure, but ultimately there are many other factors that contribute to the price paid by the motorist.
You can see the full interview at BBC News
Car Insurance – What are you paying for ?
The law states under the Road Traffic Act that it is a requirement to have third party road risks cover.
In this day and age when we telephone our insurance company to look for insurance cover for our vehicle, are we buying insurance or are we buying something else as well?
Modern car insurance now includes many additional covers to the original legal requirement.
We have comprehensive cover. This is all risks cover on your vehicle.
Approved Repairers
Your car can be repaired whether you are at fault or not and you do not have to wait for the third party to pay you to start the work.
You can have the car repaired upon authorisation of your insurance company. In this day and age the work required to be carried out on your car is undertaken by an approved repairer appointed by your insurance company.
The approved repairer would have agreed terms conditions and charges for parts and labour with the insurance company. In return, the approved repairer becomes one of the insurance companies approved panel of approved repairers and have the guarantee of work under the terms agreed.
If your car is a classic car or car that would require specialist dealers it is worth checking that they are on the panel or there would not be a problem in the event of a claim to use them. If in doubt, check with a specialist classic car insurance broker you may need a specialist policy.
Motor Legal Expenses
Car Insurance Blog thinks this is an essential add on to modern car insurance. It covers legal dispute in the event of a claim. There are limits to the cover and higher limits maybe available for an additional premium.
Road side Assistance / Free breakdown cover
This can be added for an additional cost per year. >
Car Hire
This cover allows you upon authorisation of the insurance company to hire a vehicle whilst your vehicle is being repaired.
It is worth looking at this cover to see if you are covered for a comparable vehicle or it is limited to the type of vehicle you can hire.
Normally the insurance company use a panel of hire companies to provide the vehicle.
Claims Helpline
This is normally a free or local rate telephone number which can be called to a call centre at the insurance company. They are trained to help you with your claim.
Check to see if your insurance company has provided this service free of charge.
It is always worth checking your car insurance documents sent from the insurance company you have placed your insurance cover with to see exactly what you have paid for and whether you need this cover.
Also check the excess that the insurance company has applied to your policy in the event of a claim.
Excesses
An excess is the amount that you have to pay towards your claim. This can be anything from £50 to £1000. Also check the other excesses that apply you may be penalised because of your age, convictions etc. If you think these limits are too high speak to your insurance company to see if the excess can be reduced to a more affordable amount. The problem with this is that insurance companies may want more money. Insurance companies normally provide a discount to the premium for higher excesses, so the higher the excess the lower the premium.
If in doubt, talk to a car insurance broker who can talk you through the covers and compare car insurance on your behalf.
Even if you don’t drive you couldn’t have missed the fact that car insurance premiums have risen by 40% this year! Virtually every website, TV Company and Newspaper has been complaining about the costs.
Car Insurance rates and premiums are now being investigated by the UK Government.
So how do they come up with car insurance premiums?
The price of insurance especially car insurance is always an active subject. The television ads are crammed with insurance companies and comparison sites fighting for more business saying that there product is cheaper or better value than their competitors ,but how can they do this surely a car is a car ?
Car premiums are calculated using many factors with additional loads and discounts there are more than thirty. Many people think it is just the car they drive that sets the rate, in fact the major differences in prices comes from an assessment of the driver risks.
The major rating factors that constitute the rate are:
The type of vehicle
The type of vehicle provides the insurers with details of engine size, car capabilities, seating capacity and from historical claims records the frequency and cost of past claims relating to that type of vehicle. They can also establish from their approved repairers the cost to repair and labour costs specific to that type of car.
All modifications should be advised to your insurance company as this can affect the value of your car and you may find that your policy is not suitable for your car in its modified state.
Mileage
This question allows them to ascertain the chance of you having an accident
As well as your driving experience it gives them an idea of your frequency to have an accident and the times that you are driving.
Location
Location of where the vehicle is parked over night is a rating factor. Inner cities can impose higher premiums than in rural areas.
Details about you
They will ask what connection you have to the car. Are you the main user? The main user maybe a younger driver and so this will have an affect on the price and excesses being charged.
Sex
This used to be rating factor for some insurers, but now due to legislation does not apply.
Age
Your age ascertains your driving experience and knowledge. The insurance company can look at their claims records and ascertain the amount of accidents from drivers of certain age groups. If you are a young driver you should check your policy document for additional excesses which apply. This is also applicable to inexperienced drivers.
Occupation
Your occupation provides your insurer with some idea of your driving lifestyle and it can be loaded or discounted for certain occupations.
Convictions
This gives the insurance company an idea of your moral code. It may mean that they will refuse you cover or they could impose a hefty loading to the premium or excesses that apply. It is all dependent on what the conviction was and whether it can affect your driving or propensity to claim.
Excesses applied
Some excesses are imposed for example inexperienced or young drivers.
Other excesses applied are voluntary. If the excess increases you are taking on more of the risk yourself and so the insurance companies can lower the premium as it removes the chance of many small claims which are time consuming and expensive to manage.
Car Insurance premiums are individual and will be different for each person and vary from company to company.
Given that there are so many rating factors involved in creating a car insurance premium, Car Insurance Blog is surprised that Car Insurance Companies can impose a 40% premium hike across the board and would be interested to know how they’ve actually applied this to the rates, especially as they were all recently reprimanded by the OFT for real-time price fixing!
