Fitch: “Motor insurers will not reduce premiums for two years”

insurance premiums rise

At last someone is talking sense!

Fitch, the leading credit ratings agency said today that the cost of motor insurance will not come down for at least two years; this is after the government pushes ahead with their proposed whiplash reforms.

These proposed changes by Justice Secretary Chris Grayling mean that if you get whiplash from a road traffic incident you will only be able to pursue a compensation claim through the small claims court.

We believe that those who suffer soft tissue injuries (such as whiplash) in incidents will find it more difficult to obtain compensation for their injuries, suffering and financial losses through the small claims system; in fact the current proposals remove the right to claim for damages for pain and suffering. We are strongly against them.

Fitch also added in their announcement that even if the government’s proposals were implemented, saving the insurance industry billions of pounds a year, that they will be ‘reluctant to pass savings on to consumers before seeing evidence of reduced claims costs’, even though in lobbying the government for these changes insurers said that consumers would see the benefits of cheaper insurance as they saved money from not paying out on fraudulent claims.

The Ministry of Justice has also said time and time again that the proposed reforms will lead to a cut in annual insurance premiums by around £50, although we note that to date only two insurance firms have publicly committed to such a reduction.

Like any sane person, we want to see an end to fraudulent compensation claims, and the current system works well –  it allows access to justice for all and the system regulates itself; compensation lawyers and insurance firms are successful in weeding out and stopping fraudulent claims.

The UK legal system can be complex for those outside it, and if you can navigate it then you’ll tend to find that a good solicitor will always be able to negotiate a better compensation pay-out than an individual, just what the insurers are afraid of!

Fitch said motor insurance premiums will keep rising because the levels of reserve releases that have supported profitability in recent years are unsustainable in the long term.
 
The rating agency noted that prices have been shooting up since early 2015 and reached a 10% year-on-year increase in the second quarter of 2016.

Source: http://www.insurancebusinessmag.com/uk/news/breaking-news/fitch-whiplash-reforms-wont-significantly-cut-premiums-before-2018-37931.aspx

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