Motor insurers under fire as claims fall but premiums rise

Insurance companies faced a fresh charge of profiteering yesterday after figures showed that motor premiums had soared despite a drop in the number of claims.

Drivers have seen policies rise by an average of £110 in the past year, with motorists being quoted an average of £781 for comprehensive cover.

The increase has been mainly put down to a government-imposed rise in insurance premium tax , which is levied on all policies, combined with a surge in whiplash-style injury claims.

However, critics said yesterday that industry research cast doubt on allegations that injury claims were on the rise.

The report, by the law firm Weightmans, revealed that the number of claims from road accidents dropped by almost 7 per cent over the past 12 months. Its figures showed that the claims lodged with insurance companies fell from 876,214 in 2015 to 816,722 last year. The study also showed that the average value of claims had risen over 12 months.

Damages paid to claimants increased by 3.4 per cent, from £2,586 in 2015 to £2,673 last year. However, the report admitted that a “brake” had been put on damages in the past 12 months, with the rise recorded in 2015-16 being lower than that in previous years.

Thompsons Solicitors, which has been heavily critical of the insurance industry in the past, seized on the findings yesterday, claiming that it showed that companies were “set on increasing premiums no matter what”.

Tom Jones, head of policy at Thompsons, said: “It’s clear that the number of claims — whether they’re up or down — has no bearing on the cost of car insurance. The end goal is exposed for what it really is: consumers to pay more so that shareholders and CEOs continue to enjoy booming profits and dividends.”

His claims follow a rise in insurance bills in recent years, with a study this month from Confused.com, the price comparison website, showing that annual cover had increased by 16 per cent in the past 12 months.

Weightmans insisted that the findings of its report had been misrepresented by Thompsons. It said that the rise in payouts to those involved in road accidents represented “damages creep”, which was pushing up the cost of premiums. It said that the findings bolstered the case for government reforms to the system, including capping whiplash compensation and limiting payments to solicitors.

Insurance premium tax has also been increased three times in the past two years and will stand at 12 per cent by this summer, further pushing up premiums.

Rob Cummings, assistant director at the Association of British Insurers (ABI), said: “Cost pressures on insurers have been rising. These have not been helped by those disreputable claimant lawyers who have been stoking up the costs of whiplash-style claims for their own financial gain.”

This month’s Confused.com study said that premiums could soon reach £1,000.

The ABI has insisted that premiums are rising at a slower rate than those quoted by price comparison websites. Its own figures show that the average premium has risen by 8 per cent in the past year to £462. This has added an extra £34 a year to the cost of cover.

•From today GPs will be able to report patients as being unfit to drive without informing them first. The General Medical Council has decreed that doctors will no longer need to gain their patients’ consent before reporting them to the DVLA. It means that elderly patients in particular could find themselves banned from driving without any discussion with their GPs.