A bit of good news among the bad: the cost of bodily injury claims is levelling out. But motor premiums still need to rise
Bodily injury claims are here to stay. According to an actuarial report revealed by Insurance Times this week, the frequency of BI claims continues to rise, as does the proportion of accidents that result in a claim. And all the while, the actual number of accidents is falling. A tricky conundrum that can be best explained by another stat from the actuaries: the number of claims management companies has risen by one-fifth in the past five years. We’ve all had a text, call or email inviting us to file a claim; we all know what’s driving that trend.
What’s needed is a government clean-up, and finally this week, it looked to be on its way. As we report, early indications suggest that the cost of bodily injury claims is levelling out since the introduction of the fast track for low-value claims. Hallelujah – light at the end of the tunnel. The government indicated its readiness to implement the Jackson reforms this week, barring referral fees.
Accepting the new reality of a very high proportion of BI claims, and putting in place practical measures to limit and mitigate their cost is a must. Thanks largely to BI, the motor market was still running at a loss in 2010, with a COR of 120%, according to Deloitte. The market is unlikely to return to profit until 2012. That means the cost of motor policies must continue to rise and, sadly, consumers will ultimately pay the price exacted by the claims management companies.
• It’s a surprise there are any actuaries left for the motor market, given the number slaving away (or rather, raking it in) on preparations for Solvency II. The news that the regulations are set to be delayed by a year means that mountain to climb just got higher – but it’s the right decision. The FSA has already indicated that it will struggle to help all firms develop their internal models for capital adequacy in the set time frame. Solvency II is going to be here for a long time, and every insurer deserves the chance to make it work for them. However long it takes, the industry needs to get it right.