The number of personal injury claims registered with the government’s Compensation Recovery Unit (CRU) fell by almost half last year, from 843,000 to 445,000 – but insurance premiums have barely moved.
With far fewer cars on the road at times, motor claimed fell by 46%, to 356,000, but unsurprisingly the biggest drop (60%) was in employer’s liability, as many people shifted to working from home. The overall figure was 47%.
Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations – which extracted the figures from a Freedom of Information Act request, said: “Covid has achieved over the course of 12 months what the government set out to do with its compensation reform programme.”
He said such a significant fall in claims would bring about a large boost to insurer profits, meaning there was “no reason at all why consumers should not get their promised £35 reduction in motor insurance premiums now”.
Mr Maxwell Scott argued that Admiral’s return of £25 to policyholders last year “underlined that motor insurers have done very well out of the pandemic, and it seems fair that consumers should benefit”.
But according to Association of British Insurers (ABI) figures released last week, the average price paid for comprehensive motor insurance in 2020 was £465, down just 1% on 2019.
“Consumers should expect a much more substantial reduction in their premium than £4.65, so we urge insurers to do the right thing by Britain’s drivers and meet or beat what Admiral has done.”
He noted that the ABI estimated that the average bodily injury claim pay-out is £10,000, “so broadly speaking motor insurers have collectively saved £29bn in 2020 from a near 50% reduction in motor injury claims alone”.
The CRU figures should also lead the government to hold off on increasing the small claims limit for employer’s and public liability claims to £2,000 in May and focus solely on getting the new system for sub-£5,000 motor claims right, Mr Maxwell Scott added.
Blogging last week, Mike Benner, chief executive of the Association of Personal Injury Lawyers, also noted how little premiums have gone down despite the fall in claims, ahead of the whiplash reforms.
“Based on past and current behaviour by insurers it looks like remarkably wishful thinking by government that consumers will benefit to any significant extent from the reforms, let alone through an 85% share of the savings made by big insurers as touted in the impact assessment.
“As a result, given consumers remain blissfully unaware of what the ‘do it yourself’ whiplash reforms will mean to them when they are injured due to the negligence of someone else and that the bulk of the insurance premium cookie jar may end up with insurers, this may turn out to be one of the most unpopular reform measures in modern times.
“Sadly, unlike 2012’s ill-fated pasty tax it is still set to see the light of day. It looks clear that consumers on the whole and injured people particularly, will be the losers from these reforms.”
In December, leading defendant firm BLM said that claims for compensation after being infected with Covid-19 “appear to be gathering some momentum” amid a significant increase in claims farming activity.