The impact of LASPO and the decline in the number of claims management companies (CMCs) cut third-party personal injury claims by 10% in 2013, the Institute and Faculty of Actuaries has said.
The Institute said this was the first time in 10 years it had recorded a drop in third-party claims, and there was also a 5% reduction in the average cost per claimant, from £5,000 to £4,750.
In its fifth annual report on the issue, which collated and analysed data for 2013, the actuaries said legal changes “appear to have had an impact on motor insurance claims”.
The report found that the numbers of CMCs fell by 35% in 2013, reducing their turnover from personal injury claims by a third, from £354m to £238m.
“The number of CMCs has now halved since 2011,” researchers said. “Regions with the highest volume of CMCs continue to record the highest frequencies of third-party injury claims. London (2.2%), Liverpool (2.0%) and Manchester (2.0%), all record the highest frequency.”
The Institute said ‘frequency’ measured the number of claims as a percentage of the number of cars, rather than just volume. It said the average density of CMCs across the UK was two for every 100,000 people.
The report also found that insurers had responded to the drop in claims, by cutting third-party premiums for the financial year to the end of March by 19%.
“We believe that the reduction reflects an anticipation of claim frequency reductions by insurers and the impact of a very competitive market,” researchers said. “Net of previous premium increases, motor insurance premiums have increased below the rate of inflation since 2007.”
They said previous reports highlighted discrepancies between falls in the numbers of property damage claims and increases in personal injury claims and the high volume of small claims.
David Brown, chairman of the working party which produced the report, said legal changes in 2013 appeared to have had a “significant impact” on motor insurance injury claims.
“However, we remain uncertain as to what the final impact of these changes will be, as well as that of other legal changes, such as the upcoming whiplash reforms.
“What is clear is that the motor insurance industry anticipated the impact of legal changes and has already passed on the reduction in costs to consumers.”