Changes in the Car Insurance Market and Personal Injury Claims

Personal injury solicitors are seeing changes in car accident compensation claims, which are also being reflected in the car insurance market. According to the Association of British Insurer’s report ‘UK Insurance Key Facts’, in 2011, 14% of all private insured cars made a road accident compensation claim, while 5% of all insured motorcycles was involved in a motorcycle accident claim.

On average, motor theft claims were worth £2,652 over the year, while the average motor claim was £4,527. Part of this discrepancy is that people receive personal injury compensation for injuries sustained in motor vehicle accidents, which can push the value of road traffic accident claims up.

Whiplash injuries are seen in a lot of the claims that no win no fee solicitors deal with, with around 25% of the cost of all claims relating to whiplash.

The rising cost of road traffic accident claims

While the insurance industry suggests that fraudulent road traffic accident claims and unscrupulous personal injury solicitors are to blame for these rising costs, the problem might be closer to home. Presently, that the negligent or ‘at fault’ motorist’s insurance company deals with the cost of an insurance claim. This means it has to pay for hire cars, towing, car repairs and any personal injury claims. When liability has been established between both insurance companies, the insurers assume responsibility for their clients’ vehicles, with the at fault motorists’ insurers losing any control of costs and having to pay whatever vehicle repair bills the blameless driver’s insurers present.

According to the Competition Commission, when a car accident involves two cars that are insured by the same company, road traffic accident claim repair costs reach an average of £1,200, but when this is not the case, the cost can rise to around £1,600, adding around a third to repair costs. Furthermore, drivers receive hire cars for an average of 3.7 extra days when different insurers are involved in a motor vehicle accident claim, further increasing costs. The Commission saw no changes in the standards of repair given to claimants regardless of whether or not the at fault insurer handled the claim, despite the “significant” difference in the cost of repairs.

This is likely to be at least partially responsible for the rising cost of motor insurance claims and the subsequent knock-on effect on car insurance premiums. Ironically, it appears that the increasing cost of car insurance is actually a result of competition within the market and unfair tactics by insurance companies. The Competition Commission highlighted the fact that there is “a lack of alignment” between the interests of people involved in road traffic accident claims and the interests of their insurers.

This is another area where personal injury solicitors can help consumers understand their rights. Non-fault claimants are unlikely to have a full understanding their legal entitlements following a road traffic accident claim and this lack of knowledge could affect their standards of service.

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