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Injury claims 'add £2.4m a day to motor insurance premiums'

Simon Ward
by Lovemoney Staff Simon Ward on 23 February 2012  |  Comments 3 comments

The Association of British Insurers says spiralling legal bills for injury claims are increasing motor insurance premiums.

Injury claims 'add £2.4m a day to motor insurance premiums'

The legal costs of settling personal injury claims following motor accidents is adding £2.4 million a day to motor insurance premiums, says the Association of British Insurers (ABI). That equates to an extra £30 a year on the average annual comprehensive motor insurance policy.

And legal bills frequently exceed the amount of compensation paid out to accident victims.

The ABI estimates that legal fees add an equivalent of £1,666 to motor insurance premiums every minute. Between 2004 and 2011, it says there has been a 130% increase in claimant’s legal costs.

One insurer’s average claimant legal costs in 2010 were 142% of the value of the compensation received by victims.

The ABI also cites the example of a work-related injury settled out of court for £12,750 which had legal costs of £74,000.

And a legal bill of £37,250 was submitted for settling a claim for £15,000 compensation for a woman who fell into the moat of a castle.

The Government is extending the claims limit for fast-track personal injury motor claims from £10,000 to £25,000, partly to lower legal costs. It has also pledged to reduce the fixed fee - currently £1,200 - that lawyers can earn from small-value personal injury claims.

The Prime Minister has also vowed to tackle the number of whiplash claims, which accounts for 70% of motor insurance injury claims. It is already pushing for a ban on referral fees, where people or companies sell on insurance claimants’ details following an accident.

The Office of Fair Trading is due to publish a report on the motor insurance industry in the spring.

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Comments (3)

  • nawaratri
    Love rating 1
    nawaratri said

    Referral fees need to be banned as so many companies call you after an accident to try to pursuade you to claim its ridiculous.

    My daughter was involved in a small crash and at the age of only 17 was bombarded with phone calls to encourage her to claim for injuries she did not have.

    The promise of a potential settlement of around £3000 was tempting, yet I admire her in not succombing to what has now become blatant abuse of injury claims.

    Anyone who does not have genuine injuries and claims YOU are to blame too.

    We are all paying the cost of spiralling insurance policies.

    If the insurance companies did not get a fee of around £200 per referral they would not even bother passing on confidential data and phone numbers.

    Its a case of who is going to act honestly first...

    Report on 23 February 2012  |  Love thisLove  0 loves
  • easygoing
    Love rating 156
    easygoing said

    barry1936, I don't think anyone is suggesting that a genuine victim of whiplash is not deserving, but being so hard to prove, and the encouragement to make claims, you must be aware that a lot of people are successfully 'trying it on'.

    A recent Radio4 programme highlighted the fact that genuine claimants of disability allowance are being hassled in public by people accusing them of being cheats. This is against the fact that malicious false claims are only .5% of the total bill. Just to elaborate I mean those who pretending to have a disability and are perfectly fit.

    If judges and juries had nipped this claims fiasco in the bud when it first reared it's ugly head we would not be in this mess. Unfortunately greedy lawyers feeding greedy people have been allowed to escalate this fraud. I can't see anyone putting this can of worms back in it's can succeeding easily.

    Report on 23 February 2012  |  Love thisLove  0 loves

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