According to a recent report and article from Mike Benner, Chief Executive of APIL (the Association of Personal Injury Lawyers), during the coronavirus pandemic the cost of personal injury claims to motor insurers almost halved as the number of claims fell by 62%. In comparison, during the same period, the average cost of car insurance premiums has fallen by just three per cent.
In the past, the insurance industry has had a track record of failing to ensure that savings made by them from the reduction of personal injury claims are reflected in the premiums paid by motorists. Since the introduction of Legal Aid, Sentencing, and Punishment of Offenders (LASPO) Act in 2013, the cost of injury claims settled by car insurers has fallen by 23%. Despite this, the average car insurance premium has increased by 17%.
The implementation of the Government’s whiplash reforms, now delayed until April 2021 following the outbreak of Covid-19, is intended to “reduce insurance costs for ordinary motorists by tackling the continuing high number and cost of whiplash claims”. However, if the majority of motor insurers can’t pass on huge savings to consumers during a pandemic, what are the chances after the whiplash reforms?
Admiral appear to be the only insurer passing on some of their savings to consumers, having reported that they were delighted to make a £25 premium refund payment to all customers covered by them on 20th April 2020 in recognition of them staying at home and driving less during the first UK-wide coronavirus lockdown. However, as yet, other insurers have failed to follow suit, and have retained the savings internally rather than passing them on to their customers.
If you have any questions in relation to the topics discussed in this article, please contact Julie or another member of the team in Derby, Leicester and Nottingham on 0800 024 1976 or via our online form.