If motor consumers are suffering now, it’s because of insurers that previously indulged in suicidal pricing

RBS Insurance chief executive Paul Geddes reckons the insurer has taken its final blow from bodily injury this quarter, with the announcement of a £33m third-quarter loss. This comes on top of a £203m loss for the previous quarter.

Analysts have privately speculated that RBSI might have been wise to keep its reserves towards the lower level of acceptability during its last sale process, which came to naught. Geddes says not.

Either way, one thing is clear. The eye-watering impact of bodily injury claims is still playing out. In fact, given that no real action has been taken to address the problem, expect far worse to come. As Geddes points out, the more widespread judicial use of periodical payment orders is just one of the factors driving the constant increase in costs.

All of which should make interesting reading for the House of Commons Transport Select Committee, which this week took evidence for its inquiry into the cost of motor insurance. It’s an irony really. The inquiry should, if anything, be asking why motor insurance has been kept artificially low for so long. Because if consumers are suffering now, it’s not the fault of today’s market; it's the insurers that previously indulged in suicidal pricing to build volume over a number of years. Not to mention those claims cowboys.

Rather than use the insurance industry as its whipping boy, the committee should recognise that there's been no market failure. If it wants to cut the cost of motor insurance, it should take heed of Biba and ABI, which have set out sensible plans to do just that. IT