In the news...

Drivers to pay for all accidents with cyclists
Motor premiums could rise by £50 as a result of EU proposals to make drivers liable for accidents with cyclists, said the RAC.

Under the proposals drivers' insurers would have to pay out, regardless of which side was at fault, for cyclists' medical and repair costs.

The plan has infuriated motorists groups and insurers.

The idea is one part of a shake-up planned for European motor insurance contained in the EU's Fifth Motor Insurance Directive.

ABI motor manager Jo Dagustan said the association was seeking clarification because the commission's intention was not clear.

"It would be a massive change to the UK's liability regime," she said. "We just haven't seen the evidence in the UK that such a change is demanded."

Exaggerated claims
Bogus witnesses and doctors who support exaggerated injury claims are pushing up the cost of motor claims, motor investigation experts have warned.

Vincent Sherman & Associates marketing director Derek Ross said these were two of the fastest growing areas of motor fraud.

He said many claimants considered exaggerating their injuries in a motor claim to be morally acceptable.

"As a cynical claims professional, I'd say that no motor accident takes place these days without the innocent party being injured," he said.

"It's encouraged by a lack of willingness on the doctor's behalf to record their doubts, although this may be because they themselves are concerned about being sued.

"In over 20 years in the claims field, I have never seen a follow-up medical report that says the claimant had fully recovered, they all include some form of continuing complaint."

Ross estimated that 70% of personal injury claims were subject to minor exaggeration, with 10% being significantly exaggerated.

Ross said Vincent Sherman's investigators had also noted an increase in the number of false witnesses involved in claims.

"One recent example is a motor accident where the insured really impressed our investigator, who was convinced he was telling the truth," he said.

"Unfortunately the third party produced a statement from an independent witness who blamed the insured for the accident.

"We conducted a search of our databases and found seven previous addresses for the witness, one of which was three doors down from the third party he did not know.

"Armed with this information, we interviewed the witness who admitted the statement was fraudulent."

Whiplash rating
The Motor Insurance Repair Research Centre (Thatcham) will launch Europe's first whiplash rating procedure in October, in a bid to cut the £1.6bn annual cost of personal injury claims.

Whiplash makes up more than 80% of personal injury claims, with the figure expected to double within the next five years.

Thatcham will test vehicle head restraints to determine their ability to prevent injuries.

It will also evaluate whiplash performance using special crash test dummies and will soon start testing vehicle seats using one of only two Hyper-G sleds in existence.

The sled allows the crash characteristics of individual vehicles to be reproduced many times over without the cost of damaging actual vehicles.

Thatcham crash laboratory manager Matthew Avery said the insurance industry had already invested more than £1m in the project.

He said a number of car manufacturers had supplied seats for evaluation, with more to follow suit.

Motor quote
Primary Direct has increased its personal lines portfolio by selling motor and motorcycle related policies via its quoteline number. The company searches for the best insurance deal from a range of policies. Benefits include protected no claims discounts, occupational discounts, and cover for former company car drivers.

Family cars deal
Zurich is set to move into the mid net worth market by covering all the cars in one family. As a result there will be a single renewal date. Meanwhile Capita Repair Network has secured a three-year contract to provide property claims services to Zurich customers.

Price war
The motor market is on the brink of a price war, according to senior market sources.

A number of senior brokers and underwriters confirmed that price rises have slowed to a stop and that the market could be at the top of its cycle.

Highway Insurance underwriting director Chris Hill confirmed that underwriters are selectively dropping rates and discounting in some profitable segments.

Ian Mantel of Manor Insurance said that he is being offered rates that are cheaper than they were this time last year. "We are definitely at the peak of the cycle and could go into freefall," he said.

The displacement of Royal & SunAlliance (R&SA) as insurer for Sainsbury's in favour of esure could have an effect on the market, said one source. "R&SA will be keen to utilise its resource and spare capacity before it becomes a cost," she said.

She added that with Churchill selling through brokers and with Tesco continuing to profit from low pricing, a price war is now inevitable.

ATE difficulties
The Motoring Uninsured Loss Recoveries Association (Mulra) has said that uncertainty will continue to affect the after-the-event (ATE) market , despite the Callery v Gray judgment.

The association said difficulties remained over the recoverability of premiums, although the judgment endorsed the ATE concept.

Association chairman David Haynes said court challenges would continue as, in many cases, the courts still had to decide whether an ATE premium was reasonable.

"Far from giving up on before-the-event, brokers should welcome the certainty that it offers them and their clients," he said.