Daily briefing: Wednesday – No such thing as a quick fix

For the last few years, the Jackson review of court costs has been seen as the insurance industry’s magic bullet for tackling the spiraling increase in personal injury claims costs.

Hailing the reforms, the ABI has predicted that when they come into force ‘motorists can look forward to cheaper insurance’.

Therefore, a new report by Datamonitor is likely to make for disappointing reading.

The study, based on interviews with insurers and solicitors, shows that claims costs are expected to keep rising for some time, from £8.4bn in 2010 to £9.7bn by 2014 – an increase of 3.7%.

Motor claims have been a conundrum for some time. The roads have never been safer with the number of accidents at a historically low level. However the number of accident claims continues to spiral, from 5557,186 in 2003/04 to 846,946 in 2009/10.

The increase forecast by Datamonitor is lower than previously predicted (5.4%). Much of the slowdown is accounted for by the Ministry of Justice’s recent changes to the process for dealing with low value accident claims.

But Datamonitor concludes that, based on its interviews with insurers and solicitors, the reforms will not feed through to lower claims – for the next three years at least.

Silver linings

But the report’s conclusion is not quite as disheartening as it appears on the surface.

The government’s reforms require legislation to be implemented and this will take time. The Ministry of Justice is yet to submit a bill to Parliament to take forward the review, meaning that it will not become primary legislation until 2012 at the earliest. And the backlash against the costs clampdown could further disrupt the Parliamentary timetable. Even after Parliament’s approval has been secured, implementing the fine details will take more time.

For the insurance industry therefore, Jackson is a long-term game rather than a quick fix.

Complaint-riddled company down the pan

Another day, another payment protection insurance broker bites the dust. This morning, we reported that PPI specialist Wilmslow Financial Services has gone into administration .

Wilmslow was already on the Insurance Times radar. Last year, when we analysed the Financial Ombudsman Service’s general insurance complaints data, the Cheshire-based company’s name cropped up. This breakdown of the Ombudsman’s company-by-company data showed that Wilmslow had attracted 198 general insurance-related complaints in the last six months of 2010, making it the 35th most griped about firm in the GI field.

The failed intermediary is small fry compared to many of the names in the list, like Lloyds and Barclays. However, while these behemoths of the financial services industry will clear up their own mess, any claims stemming from complaints about Wilmslow will be picked up by the Financial Services Compensation Scheme.

Sadly for brokers, it just confirms that predictions of a further hike in the already spiraling FSCS levy look set to be close to the mark.

David Blackman is deputy editor.