Government is using motor insurers as scapegoats, actuary says

Motor insurers could be forced out of the market by new legislation and are "scapegoats" for government initiatives, according to a leading actuary.

EMB actuary Mike Brockman, who co-wrote the Third UK Bodily Injury Awards Study, said: "Insurers are being used as scapegoats to fund government promises.

"Legal issues present uncertainty and insurers may wind down their motor market and some may pull out altogether. That will reduce supply and prices will go up and policyholders will pay."

Now insurers want the ABI to take action and lobby the government on their behalf.

Insurers saidthe introduction of reviewable payment plans for bodily injury claimants would leave claims open, causing uncertainty within the industry.

Insurers are already trying to deal with hikes in NHS payments, the possible introduction of payment for fire service calls outs for motor victims, the inflation of medical treatment costs and a lack of rehabilitation facilities .

Churchill motor underwriting head Craig Staniland said: "The legal plans will change the basis of underwriting.

"The ABI, as our central body, should lobby the government on our behalf otherwise we will always be responding to changes in the law."

A Norwich Union (NU) spokesman added: "NU is in favour of periodic payment plans as a mechanism for settling serious personal injury claims.

"But reviewability is more contentious, and if introduced, is something that could significantly add to the cost of personal injury claims.

"While we have every desire to make sure that settlements are accurate and fair, we think the additional uncertainty created by reviewability and the likely one-way street for the reviews would be detrimental to the industry and lead to higher premiums."

The move follows the launch of the Third UK Bodily Injury Awards Study last week, commissioned by ABI and IUA.

The report concluded that insurers should analyse motor claim trends and continue to promote rehabilitation, as guided by the Rehabilitation Code.

But insurers say that will be difficult if legislation is passed.

The study showed claims frequency had dropped 25% from 13% in 1997 to its current rate of 9.9% per year.

But trends show an increase three times the rate of inflation. The study concluded that this figure would continue to rise to above 10%.

An ABI spokesman said: "We will voice our concerns about particular to relevant government departments. This is a continual process for us."