OREANDA-NEWS. The overwhelming majority of Brits (83%) are calling on the Government to honour its commitment to slash motor premiums by reforming whiplash compensation laws, according to research by the UK’s leading insurer, Aviva.

The reforms, announced by the former Chancellor in last November’s Autumn Statement, would end cash compensation for minor, short-term injuries and limit lawyers – and their fees – to cases where their expertise is needed. Aviva’s research found more than 80% of consumers support the reforms.   If implemented as envisaged, Aviva expects the ‘typical’ benefit to motorists would be a £43 cut to motor premiums – a reduction of 10% from the average price paid1. Aviva has pledged to pass on 100% of the savings to its customers.

Pressure for action from consumers is set to climb further as motor premiums continue to rise – up 10% year-on-year, according to recent figures from the ABI. Back-to-back increases to insurance premium tax, from 6% to 10%, are partly behind the increase. However, it is the frequency and cost of personal injury claims that accounts for 49% of Aviva’s claims costs and threatens to push prices skyward, and which needs urgent action.

Maurice Tulloch, Chairman Global General Insurance and CEO UK & Ireland General Insurance, Aviva, said, “Our research shows that the British public is sick and tired of the toxic compensation culture that has increased premiums, fraud and nuisance calls.  The Government has an historic opportunity to make a significant change that will cut the cost of motor insurance - and it is clear that the British public is fully behind the reforms.

“It’s time to stop the nuisance calls, stop crash for cash, stop spiraling claims that push up premiums, and stop the profiteering at the injured party’s expense. It’s time to end this compensation merry-go-round and cut the cost of motor insurance for us all.”

Compensation culture

The vast majority (85%) of Brits believe that Britain has a compensation culture, with almost nine-in-ten (88%) saying that too many people see compensation as an easy way to make cash.  In addition,  most people believe that our compensation culture fuels fraud, with 88% of respondents saying it encourages exaggerated and fraudulent claims.

The UK’s compensation culture can be seen in the contradiction of increasing injury claims despite fewer accidents and safer cars. Since 2000, road traffic accidents in the UK have fallen by 40%, while personal injury claims have grown by 89%2. The result is that the amount of premium devoted to paying personal injury claims has nearly doubled, from 25% to 49%, according to claims data from Aviva. 

The easy access to motor injury compensation has also seen the rise of ‘crash for cash’, where organised fraudsters cause accidents on the UK’s roads that put innocent motorists at risk of real harm. Aviva has linked 4,000 motor injury claims to known fraud rings, and has seen the number of organised scams almost double (up by 98%) between 2011 - 2015.

Care, not cash and cutting legal costs However, this can be halted by treating minor injuries with care, not cash – making sure claimants get the care and rehabilitation they need, but not the cash payout.  This will stop fraudsters inducing motor accidents, and put an end to the claims management companies and lawyers who aggressively chase injury claims through nuisance calls. The Government’s other proposed reform, removing lawyers from straight-forward, minor injury claims, will also curb excessive legal costs.

One out of two people (51%) are unaware that in addition to the legal costs for handling an injury claim, lawyers are also able to deduct up to 25% of the injured party’s compensation. Aviva’s research shows that 85% of people believe lawyers are paid too much – and only 3% say they are paid too little.

Tulloch continued, “A lot has happened since the injury reforms were announced last November.  Upward pressure on premiums has made the cost of motor insurance a key consumer issue which must not be ignored in the post-referendum crush of activity. 

“We know that our customers are keen to benefit from the savings offered by these reforms which is why we are calling on the Government to begin the consultation process so consumers will benefit from these savings as soon as possible. 

“This is a unique opportunity to reduce the cost of living for the UK’s 30 million motorists. We have committed to passing on every penny of the savings from these reforms to our customers.”

• Aviva provides life insurance, general insurance, health insurance and asset management to 33 million customers, across 16 markets worldwide

• In the UK we are the leading insurer serving one in every four households and have strong businesses in selected markets in Europe, Asia and Canada. Our shares are listed on the London Stock Exchange and we are a member of the FTSE100 index. 

• Aviva’s asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages over £289 billion in assets.

• Aviva helps people save for the future and manage the risks of everyday life; we paid out £30.7 billion in benefits and claims in 2015.

• By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.