Launching a report about 'The cost of motor insurance' (Fourth Report of Session 2010–11), Louise Ellman, Chair of Transport Committee said:
"Wider access to justice is to be welcomed, but it has come at a significant cost, with far more personal injury claims being made than in the past.
The police made plain to the committee that 'staged accidents' are on the increase and that, so far, we have been lucky there have been no fatalities resulting from such incidents. That luck may run out unless the insurance industry acts rapidly to help the police target this kind of insurance fraud."
The committee also highlights the merry-go-round of 'referral' payments made to or by insurance and law firms, rescue truck drivers, vehicle repairers, credit hire firms, claims or accident management companies and medical experts in connection with motor insurance claims. MPs call on the insurance industry to take steps to introduce much more transparency.
Louise Ellman added:
"Consumers are largely unaware of how much money moves around the insurance industry in this way when they make a claim. They deserve to see where their money is going. If insurance companies cannot agree a method by which to improve transparency around referral fees, then the Government should step in, with legislation if necessary."
MPs call on the Government to do more as a matter of urgency to bring down the "appalling" casualty rate amongst young drivers, including by making the driving test more rigorous.
"If we are to curb the casualty rate, especially amongst young drivers, then it’s essential that the driving test properly prepares drivers for motoring. We welcome the Minister’s commitment to make the driving test more rigorous but proposals for change have been around for years. What matters now is that the Government publishes for consultation the changes it wants to make, with a timetable for implementing them before the next election," adds Louise Ellman.
In addition, the Committee recommends the Government:
- Set out a clear timetable for new data sharing arrangements between the DVLA and motor insurers.
- Undertake a promotional campaign, aimed at young drivers, to alert them to Continuous Insurance Enforcement (CIE - the requirement for the keeper of any registered vehicle to have valid motor insurance).
- Review the penalties for uninsured driving one year after CIE has been implemented.
- Fund research to review international experience in restraining the number of personal injury claims relating to motor insurance, with the aim of publishing a discussion paper during 2012 outlining possible options for change.
Notes for editors
In evidence to the Committee, the AA’s British Insurance Premium index reported that average premiums quoted to motorists for comprehensive cover increased by 29.9% in the year to October 2010. The Confused.com/Towers Watson Insurance Price Index has reported similar increases over the last 18 months. For more information visit the Towers Watson website.