Insurers accused of raking in £7bn as premiums rise and payouts fall
Latest figures claim insurers don't pass on savings as insurance payouts drop
Falling insurance claim payouts haven’t been matched by cheaper yearly premiums, allowing insurers to cash in to the tune of £7billion since 2010, claim figures from law firm Thompsons Solicitors.
The Association of British Insurers (ABI) has hit back at the accusation as lobbying by claims solicitors. It says they’re upset with Government plans to end the right for cash compensation for minor injuries like whiplash and to increase the upper limit for small claims court personal injury cases to £5,000.
Thompsons Solicitors’ figures show that average insurance premiums have fallen in real terms and motorists paid less for policies in 2014 than in 2010. Yet cumulatively, the stats show they stumped up £353million extra in premiums over the last five years, while insurers saved nearly £7billion by paying out less in claims.
Thompsons Solicitors said the near-four per cent fall in registered claims doesn’t account for the near-30 per cent fewer insurance claims paid, either.
Tom Jones, head of policy at the firm, said it showed insurers were saving billions while raising premiums: “It looks like honest motorists have lost out both ways.
“What is clear is that the savings made have not been passed on to policyholders. The insurers are getting better at avoiding paying compensation that should be paid.”
However, the ABI said its own figures show the industry hasn’t made an underwriting profit since 1994. Instead, the association claims savings of more than £1billion have been passed on to motorists as a result of previous Government work to crack down on lawyers who have “milked the system” with “excessive legal fees and encouraging spurious and fraudulent claims”.
James Dalton, director of general insurance policy at ABI, told Auto Express: “Insurers are totally committed to ensuring customers get the best motor insurance deal. Any comments accusing the industry of profiteering smack of a sector that knows the gravy train it’s been on is about to end.”
How the claims balance has shifted
|Year||Motor claims registered||Net cost of claims incurred||New written premiums|
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