The private insurance motor market is currently going through a period of upheaval as regulatory, legal and market pressures continue to rack up. Here are just some of the last developments in the past week, and Insurance Times’ take on what they mean for the industry

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EVENT: Following legal pressure from the Association of British Insurers (ABI), the Court of Appeal revised its opinion in the Simmons vs Castle ruling.

The ruling relates to the 10% increase in general damages that will apply when the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) comes into force in April 2013.

Under the original ruling, the 10% general damages increase would have applied to all cases decided after 1 April 2013.

Following the revision, however, the 10% will now not apply to where the claimant has entered a conditional fee arrangement before 1 April 2013. For any cases started after this date, the 10% increase will be balanced by reductions in legal costs.

WHAT IT MEANS: If the original ruling had been upheld, then it would have cost insurers. Direct Line estimated in its prospectus it would have had to take up to a £45m hit in its 2012 results.

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EVENT: Shelia’s Wheels reveals gender pricing plan. The Esure-owned insurer, which tailors its policies towards female drivers, claims it is the first insurer to set itself up for gender pricing. New pricing for customers will come in on December 18.

WHAT IT MEANS: Esure is setting the pace by claiming it is the first insure to get its house in order for gender pricing. This is likely to put pressure on insurers which are lagging behind with their plans.

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EVENT: A High Court ruling in favour of RSA last Thursday over the add-on costs it charged other insurers for its car repair arrangements, has sparked fears from the industry that other insurers would adopt similar practices to protect themselves.

Allianz and Provident (now Covéa Insurance) lost their appeal against the previous High Court verdict in May 2012, which ruled the arrangements were legal.

WHAT IT MEANS: The ruling has sparked fears that insurers could inflate costs for repairing vehicles. Some wonder if that cost will ultimately end up being borne by the customer.

Covéa Insurance claims director Adrian Furness said: “There is a real risk that a number of parties will look to adopt similar programmes in order to protect themselves as they attempt to achieve some sort of status quo. This cannot be a sustainable outcome and will inevitably lead to inflation in simple repair claim costs.”

An Allianz spokesman said: “If this judgment stands, insurers tempted to seek recovery based on diminution of value, rather than the traditional repair cost, will have to produce evidence other than a repair invoice - perhaps an engineers’ report. It will result in challenge, dispute, additional cost and delayed recovery.”

It could also put pressure on the Competition Commission to come up tough solutions for the motor industry.

The Competition Commission is currently considering a referral from the OFT that insurers are involved in anti-competitive market practices. The OFT is particularly worried about the hiking of repair costs for vehicles and expensive bills that insurers are paying to credit hire companies.

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EVENT: Ratings agency Moody’s has warned that the Office of Fair Trading’s (OFT) decision to refer the UK private motor insurance market to the Competition Commission for a full investigation would create uncertainty for the industry and could result in lower premiums.

WHAT IT MEANS: Not a lot. It’s one view among many about what will happen to motor insurers when the regulatory, legal and market pressures have finally subsided.

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EVENT: AXA chief executive Paul Evans is concerned that even when referral fees are banned in 2013, there will still be a ‘perverse incentive’ for insurers to make claims through their newly owned legal firms established in the wake of the Tesco Law.

RSA said it was considering making an application under the new law. Evans said without government intervention, AXA would consider making an application.

WHAT IT MEANS: AXA has taken a tough stance on referral fees, and this has helped its reputation. For Evans to admit that AXA may take advantage of the change in the law, the Legal Services Act 2007, however, is a sign that he is fully aware AXA could be put at a competitive disadvantage holds back.

His instincts are probably right: more and more insurers will own or open up legal services, and there is a real risk that those who don’t could end up losing out.