David Blackman asks if people are finally beginning to understand the need for a price rise in car insurance
MPs don’t get it, ministers don’t really get it and national newspapers certainly don’t get it – the reasons behind the rising cost of car insurance that is.
The industry has long understood that the price of motor insurance is unsustainably low and that the last year’s increases in premiums are overdue.
But the coverage of two reports out this morning shows that perhaps the industry’s message is starting to get across to the wider world.
The two reports contain slightly different figures with the AA and Towers Watson, recording annual increases of 40% and 35.7%, respectively in car insurance premiums over the past year. But the underlying message is the same: the swift increase in the cost of car insurance continues.
But the national media have not embarked on the usual round of insurer bashing that such statistics usually generate. The Daily Express for example, which rarely passes up an opportunity to bash financial services companies, targets the compensation culture in its coverage of the AAs figures.
What explains this change of tack?
The Towers Watson figures show that the rate of increase is slowing down. Even the Transport Select Committee’s recent report into the cost of motor insurance – flawed though its findings were – may have contributed to a broader public understanding of the issues behind recent price hikes.
But probably the key factor has been the government’s drive to reform the claims system, which has shed necessary light on the dysfunctional nature of the often ill-understood claims process.
By framing the debate in terms of ambulance-chasing lawyers, the industry has dodged some bad headlines.
Our days in court
Insurers have had a mixed time in court over the last 24 hours. The good news was today’s important Supreme Court ruling on liability for deafness resulting from exposure to noise at work. The ruling, which overturned an earlier Court of Appeal verdict, means that insurers will not be liable when the noise was 90 decibels or lower.
The bad news came yesterday from north of the border where the Court of Sessions, Scotland’s equivalent of the Court of Appeal, threw out a bid by a heavyweight coalition of insurers to overturn Scottish legislation that allows pleural plaque sufferers to claim compensation for the condition.
The case will carry constitutional significance as it will provide a test of the UK-wide Court’s willingness to challenge the decisions of a devolved legislature. Insurers’ more basic hope will be that the court’s verdict on deafness case suggests a more sympathetic view of the industry than that on offer north of the border.
David Blackman is deputy editor of Insurance Times.
Email: david.blackman@insurancetimes.co.uk.
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