MoJ: private roundtable with insurers
Leading insurers have committed to giving customers 100% of the savings made from the proposed personal injury reforms, the government announced today – but did not explain if or how this pledge would be monitored and enforced.
The Ministry of Justice said ending the right to cash compensation for minor whiplash injuries and raising the upper limit for the small claims court for personal injury claims from £1,000 to £5,000 meant annual insurance premiums “could fall by around £50”, a collective saving of £1bn for all motorists.
The “agreement” came following a private roundtable meeting between the insurance industry and ministers, which according to the insurance press was held on 9 December. Credit hire was also said to have been on the agenda.
However, while answering other questions from this website yesterday, the MoJ failed to explain how the pledge would be monitored and, if necessary, enforced.
A similar, if more public, roundtable was held in February 2012 and, like this one, excluded claimant representatives, much to the chagrin of those groups.
An MoJ spokesman said this month’s meeting was held “to discuss actions that the government and the insurance industry can both take to help bring motor insurance premiums down. This meeting was not intended to replace the normal consultation process which will continue in the New Year.
“The views and opinions from a wide range of stakeholder groups is important to the government in developing policy and we will continue to engage with all relevant groups going forward. MoJ officials have already met with key stakeholders, such as MASS, APIL, FOIL and the Law Society to discuss the policy decisions announced by the Chancellor in his Autumn Statement.
“Further meetings at both official and ministerial level will be held with stakeholder groups as we develop the detail of the consultation to be issued in the New Year.”
The MoJ said the measures would be introduced “as soon as possible”, although thus far the indications have been that they would not become law until April 2017.
The government said the 2013 LASPO reforms had “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”. Last month ratings agency Fitch predicted that insurers would actually be slow to lower premiums in response to the reforms.
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.”
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.”
The MoJ press release quoted both Aviva and LV= as promising to pass on all the savings, which Aviva CEO Mark Wilson said meant around £40-50 per policy holder.
