I don’t know anyone who isn’t affected in some way by the increase in the cost of living in the UK. It seems the latest bill to really shoot up and get everyone talking is the price of car insurance. I received my own renewal premium last month and the quote was nearly double what I paid last year.
Judging by recent press reports I’m not alone; there continue to be regular stories of people being confused about inflation-busting premium increases when their own circumstances have not changed.
Yet consumers were promised that car insurance would be getting cheaper.
In 2021, the Government slashed the amount of compensation for people who suffer whiplash injuries in road collisions and created the Official Injury Claim (OIC) system. This is an online portal that aims to streamline the claims process. It was all implemented on the promise of lower car insurance premiums for everyone. Two years later, it is clear that this has not happened.
The latest data shows that the number of motor injury claims was 45 per cent lower than pre-pandemic levels. The total cost of injury claims settled by motor insurers has fallen by 26 per cent - an absolutely staggering drop in just two years.
If insurers are paying out less, then why are our premiums still going up?
Insurers will say it is due to inflation and the rising costs associated with fixing your car, but the rise in car insurance premiums has considerably outstripped insurers’ increased claim costs. When compared to the three-month period before the reforms and introduction of the OIC in May 2021, total claims inflation, including vehicle repair and theft claims, is up by 23 per cent. In the same period, however, motorists saw their premiums go up by more than double that.
If the savings promised with the introduction of these swingeing reforms were being passed on to the consumer, then our premiums should not have risen by twice the rate of inflation.
At the centre of all this are real people, suffering genuine injuries caused by the negligence of other drivers. People who should have the right to fair redress and are not receiving it because of half-baked reforms that only seem to benefit insurers.
Victims of negligence are being strong-armed into a lose-lose situation. They must continue paying ever-increasing prices for their compulsory car insurance cover, yet have had their compensation cut.
The OIC is difficult to use, when it is supposed to be a user-friendly system that claimants can navigate themselves. The latest data from the OIC shows that since its launch only 10 per cent of people making a claim are not using the support of a lawyer. If a system that is designed to be simple requires professional help to use, surely that is a sign that the system is not fit for purpose.
Now, more than ever, we are all aware of our money. That is why it is even more important to put people before profit, and make sure victims of negligence have a route to redress.