“Where are the savings?” – PI lawyers attack insurers

Benner: Insurers failing to pass on savings once again

Claimant lawyers have attacked motor insurers for failing to pass on to consumers £367m in savings they have seen because of the impact of Covid-19 in reducing injury claims.

Mike Benner, chief executive of the Association of Personal Injury Lawyers, said this figure would only increase, with claim numbers set to stay below pre-Covid levels.

He noted that the Financial Conduct Authority wrote to insurers last month to remind them to “review the value of their products in light of the impacts of coronavirus”.

Writing on the APIL website, Mr Benner said: “Let’s leave aside the fact that the regulator shouldn’t need to ‘remind’ big business of such basic matters as ensuring a fair deal for consumers.

“It is pretty clear that there is concern that harm could be caused to consumers where insurance products have not delivered the intended value to people during the pandemic.”

According to the Association of British Insurers (ABI), the cost of motor insurance is the lowest it has been for four years, with premiums in the third quarter of 2020 £8 lower, on average, than the same period last year.

But it said there were continued cost pressures, including rising repair bills and the delay in introducing personal injury reforms.

Mr Benner argued that the premium reductions “do not come close” to reflecting the reduced payouts due to Covid.

He said the number of injury claims notified to car insurers in the second quarter of 2020 fell by 62%, and 49% by value, equating to £367m. Over the same period, the average motor insurance premium fell by “a meagre” 3%.

“This £367m drop in injury claims is likely to represent a bottom line in terms of the savings which motor insurers will make as a result of the pandemic.

“This is because the value of injury claims received in further quarters is also likely to be significantly lower, as data from the Compensation Recovery Unit and [Ministry of Justice] portal shows PI claims remain well below their pre-Covid level.

“In essence, insurers are once again failing to ensure that reductions in injury claims are reflected in the car insurance premiums, despite spending years telling government that lower premiums would result if personal injury reforms were followed through.”

The Financial Conduct Authority told insurers that, by 3 December, they should review their product lines and act “where products have not delivered the intended value to customers”.

This could include providing alternative benefits, reducing premiums or partial refunds of premiums paid.

Representatives of both APIL and the ABI will be speaking at the PI Futures conference session on 23 November on next April’s whiplash reforms.

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