ABI response to Transport
Committee Report on Cost of Motoring
17 Jan 2012
The Association of
British Insurers (ABI) has published its response to the Transport
Select Committee's follow up report on the cost of motor insurance,
the recommendations of which, along with our own analysis, we presented
recently in our news post: Transport
Committee Report on Cost of Motor Insurance.
We have also reported on BIBA's
response to the Transport Committee Report. BIBA had more to say
publically than the ABI about the Committee's latest proposals, at
least in terms of their respective press releases.
We would therefore refer the interested reader to the BIBA
response (and our own more informative response - the first link above)
for more detail on the issues raised by the Transport Committee's
report.
Nick Starling, Director of General Insurance at the ABI had this to
say: "We are pleased that the Transport Select Committee has recognised
that spiralling personal injury claims are the real reason car
insurance premiums have been increasing and made recommendations for
meaningful reform. It is absolutely critical that Britain’s whiplash
epidemic is tackled once and for all and the Select Committee’s
acknowledgment that the bar to receiving compensation for whiplash is
too low is a step in the right direction.
“The Committee is also right that the fees lawyers receive need to be
reviewed as they currently add unnecessary cost.
“Every motorist wants the best deal and insurers are determined to
deliver value for money motor insurance. Our customers are fed up of
getting text messages, fed up of the compensation culture and have had
enough of paying higher car insurance premiums to line the pockets of
ambulance chasing lawyers and claims management companies.
“We are baffled though that the Transport Select Committee has again
called for the transparency of referral fee arrangements of insurers.
Referral fees should be banned altogether and not made more transparent
- and that ban should apply to all organisations receiving them, not
just insurers. Banning referral fees and, crucially, reducing legal
costs will improve the situation for customers."
Actually, the Transport Committte's report supports the Government's
referal fee ban which currently is restricted to legal referral fees in
terms of its proposed enforcement but the Committee calls for a blanket
referral fee ban - to prevent, for example, fees paid by uncompetitive
credit car hire firms to referring agents. It is their anticipation
that the referral fee ban will not, at least initially, be a blanket
ban that has led them to call for transparency.
From our perspective, we don't believe that characterising injury
lawyers as 'ambulance-chasing' is an accurate generalisation. We also
believe that the above response does not take adequate account of the
full complexities of the issues that have led to huge car insurance
price increases or their potential solutions, in particular more
radical reform than the Committee proposes would be needed to create
the right market dynamics to support a reduction in legal fees.
For a full review of the arguments that the Committee's report
generates, please follow the link in the first paragraph above.
Related article:
APIL
response to Transport Committee Report
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