Transport Committee Report on
the Cost of Motor Insurance
11 Mar 2011
by Donald MacKenzie
Following its hearing into the
causes of the increasing cost of car insurance
in this country, the Transport Select Committee has now published its
report on the cost of motor insurance.
Here, we will look at the report's conclusions and recommendations,
having already reported on the committee's proceedings in earlier blogs. Their full
report can be reviewed online.
The Transport Select
Committee has called on the government to:
- investigate the role played
by legal and regulatory rules in generating the continuing increase in
personal injury claims relating to motor accidents and to assess the
impact of changing these rules on access to justice;
- assist the police and the
insurance industry in tackling fraud more effectively;
- clamp down on uninsured
driving; and
- ensure that the driving test
properly prepares young drivers for motoring and look at other ways of
ensuring that young drivers are encouraged to drive safely and can
demonstrate to insurers their commitment to doing so. (Paragraph 12)
The first of these bullet points seems to be
cautioning the government against immediately implementing the Jackson Report
recommendations without first conducting evidence-based research
into the possible effects on access to justice. This recommendation is
consistent with the report published by a heavyweight group of legal
academics, led by Prof Ken Oliphant, on which we have reported
previously: On a slippery slope -
a response to the Jackson Report.
The committee's report on the cost of
motor insurance calls for "the Department [of
Transport to] sponsor a research project on international experience in
restraining the number of personal injury claims relating to motor
insurance, with the aim of publishing a discussion paper on this issue
during 2012 outlining possible options for change". This is certainly a
logical recommendation given that car insurance fraud has been
inadequately addressed in this country and is pushing up the cost of
car insurance, as we have reviewed in previous blogs, including our car insurance fraud series.
The Committee "welcome[d] the initiative to establish a dedicated
police unit on insurance fraud, paid for by the industry". This
recommendation could be financed via a USA-style levy on car insurance
premiums of about a pound.
In a sensible and practical recommendation, that appears to take
account of the government's omission from their Jackson green paper
consultation document of his recommendation that referral fees be
scrapped, the Committee has recommended that "insurers should publish
on their websites a list of the firms with which they have referral
arrangements, an indication of the level of the fees paid, and a clear
explanation of how referral arrangements work and their purpose. Policy
holders should be sent this information with their insurance documents.
"When claims are made, insurers should make it clear to claimants that
they need not use the solicitor, vehicle repairer or credit hire firm
which is recommended by the insurer. We look to the insurance industry
to implement a more transparent regime for referral fees by the end of
next year and to the Government to step in, with legislation if
necessary, if the industry is unwilling or unable to agree on this".
The Committee welcomed the introduction of continuous insurance
enforcement (CIE) and, like the car insurance industry witnesses at
their hearings, and, indeed, the position of this website, they called
for 'vigorous' pursuit of those that do not have valid car insurance
along with review of these penalties after a year of CIE.
They also welcomed the government's plan to share DVLA data on driving
license points with car insurance providers and to render the driving
test more rigorous in order to increase young driver skills and reduce
their risk behind the wheel.
They also called on the government to look into how telematics might be
more widely deployed by the car insurance industry to assist young
drivers in particular to reduce the cost of their cover.
These Transport Select Committee
recommendations represent a measured, logical and practical response to
the key drivers of the rising cost of car insurance and, as such, can
be welcomed.
Update:
Transport
Select Committee Report of Jan 2012
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