July 31 2014 Latest news:
Adam Aiken, Editor
Friday, March 11, 2011
Urgent action is needed to address car insurance fraud, including so-called “crash for cash” scams, MPs have said.
A report by the House of Commons transport committee has called for the setting-up of a dedicated police unit, paid for by the insurance industry, to tackle the escalating problem.
In its report, the committee also called on the government to make driving tests more rigorous to help bring down what it said was the “appalling” casualty rate among young drivers. And the MPs said the insurance industry should be more transparent when it came to referral payments involving organisations as such rescue truck drivers, vehicle repairers and medical experts.
Average quotes for comprehensive motor insurance increased by 30pc in the year to last October, and insurers have made it clear that the increase in fraudulent personal injury claims has been one of the main reasons for the increase in premiums.
Committee chairman Louise Ellman said: “Wider access to justice is to be welcomed, but it has come at a significant cost, with far more personal injury claims being made than in the past.
“The police made plain to the committee that ‘staged accidents’ are on the increase and that, so far, we have been lucky there have been no fatalities resulting from such incidents. That luck may run out unless the insurance industry acts rapidly to help the police target this kind of insurance fraud.”
Responding to the report, AA Insurance director Simon Douglas said: “It has brought many of the factors that influence car insurance premiums, particularly personal injury costs and fraud, into the public area.
“At a time when the cost of motoring is soaring, with the cost of unleaded petrol passing £6 a gallon, drivers are looking to the insurance industry to work with the government to control spiralling claims costs that ultimately fuel premium inflation. For many, especially the young, the cost of insurance is simply becoming unsustainable.
“If the main recommendations of the committee are implemented, I would expect premium increases to come under better control.
“However, there remains an enormous amount of work to do, particularly in helping young people to start driving safely and responsibly.”
However, Nick Starling, director of general insurance and health at the Association of British Insurers, said personal injury claims and spiralling legal costs were often driven by claims management firms.
“This report is a missed opportunity. The committee took a great deal of evidence and has chosen to ignore much of it,” he said.
“The committee should have called on the government to implement in full the recommendations of Lord Justice Jackson’s report into tackling the compensation culture.
“This will not only control excessive legal costs, but will speed up the payment of compensation to genuine claimants. Until this happens, the cost of motor insurance will continue to rise.”
“Legal costs alone now add an extra £40 a year to the average motor premium, and motorists should not have to foot the bill for our cost-ridden compensation system.”