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Queen’s speech delivered: insurance industry reacts

Queen’s speech delivered: insurance industry reacts

Queen’s speech delivered: insurance industry reacts Bethan Moorcraft

New legislation announced in the Queen’s speech today will clamp down on fraudulent whiplash claims and malpractice among claims management firms.   

The Civil Liability Bill aims to whittle out bogus whiplash claims and pay full and fair compensation to genuinely injured people. It will prohibit offers to settle whiplash claims without medical evidence and will pin compensation payments to a fixed tariff system. 

The government says the new law could save motorists an average of £35-£40 per motor insurance policy, which will help mitigate some of the recent increases due to the Ogden discount rate change.

Commenting on new legislation announced in the Queen’s Speech today, Zurich UK CEO, Tulsi Naidu said: “Zurich has been leading the way in reducing fraudulent whiplash claims to protect honest customers who end up covering the cost through their motor insurance premiums. But we need Government action to help continue this momentum.

“We therefore welcome the Government’s decision to introduce the Civil Liability and Financial Guidance & Claims Bills, to tackle fraudulent whiplash claims and malpractice among claims management companies, including nuisance cold calling.

“We note the Government is seeking to ensure “full and fair compensation is paid to genuinely injured people”. In doing this, the Government must address the urgent issue of the personal injury discount rate and respond to its consultation with appropriate legislative action.”

Andy Watson, CEO of Ageas UK, praised the Bill for producing a legislative way to address the “disastrous decision to reduce the discount rate to -0.75%”. He urged haste in its introduction to reduce the number of customers overpaying to cover the costs of flawed compensation pay-outs.

The UK currently has a rife compensation culture, with fraudulent claims adding around £40 to the average motor insurance policy. The Civil Liability Bill aims to redress the balance and reduce premiums.

“The insurance industry is highly supportive of any attempt to reduce motor insurance premiums by combatting compensation culture, but bitter experience has taught it that this can be a rather like playing the arcade game Whac-A-Mole. If you hit the problem in one place, it tends to pop up in another,” said Mark Hemsted, partner at Clyde & Co.

He added: “Addressing issues in the court system will also help reduce costs and make the process of settling claims faster. With regard to the practicalities, this government has an awful lot on its agenda so it’s hard not to see the potential for this legislation to slip down the running order. Insurers will need to be vocal in their support if they want to ensure these measures maintain momentum.”

While insurers welcomed the new legislation, many noticed the silence over the Ogden discount rate consultation. The Government is yet to announce whether it will be included in the Civil Liability Bill.

Mohammad Khan, general insurance leader at PwC, commented: “The worry for motorists would be if the Government decides not to revisit the Ogden discount rate methodology in this Parliament, meaning premiums will have to continue to rise next year.

“If we applied the current methodology for estimating the Ogden discount rate, the rate would move to -1.75% next year. This would further increase motor insurance premiums by approximately £50-£100 and by approximately £200-£500 for younger drivers.”

The Government also introduced the Automated and Electric Vehicles Bill, which will make it compulsory to insure autonomous vehicles. 

“The introduction of legislation for insurance for autonomous vehicles is welcome,” said Andy Watson. “This technology is rapidly developing and it is important that the law keeps pace to allow its testing and eventual adoption on UK roads. The economic, safety and societal benefits of automated vehicles are clear and we will work with Transport Ministers and Parliamentarians to ensure the legislation is robust and fit for purpose.”


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