Proportion of road traffic accidents involving an injury claim is now almost one-quarter
The proportion of motor accidents triggering a compensation claim continues to increase, according to a heavyweight analysis of insurers’ claims data.
But, in better news for the industry, the same report indicates that the Ministry of Justice (MoJ)’s recently introduced fast-track process for handling low value claims is stemming the rise in legal costs.
The findings of the Institute and Faculty of Actuaries’ working party into motor insurance claims, presented at a seminar on Tuesday, shows a slow-down in the rate of increase in accidents per policy since the beginning of 2010.
The proportion of accidents involving an injury claim continues to rise, however, and is now approaching 25% – double the level that it was in 2005, the report shows.
This increase has been accompanied by a 20% rise in the number of claims management companies in the UK over the past year. London and the North West have seen particularly sharp rises, with Liverpool and Manchester both recording increases of around 50%, according to the working party’s chairman David Brown.
The report also assesses the impact of the MoJ’s new fixed-fee system for processing small road accident claims, which was introduced just over a year ago.
It shows that the cost of settling injury claims has not increased over the last year, smaller claims are being settled quicker and insurers are paying out more rapidly.
But the report’s authors warned insurers against being lulled into reversing the recent steep increase in motor premiums. Brown said: “There is a risk that insurers might respond to the emerging good news too early, and that might lead to pricing that is less than their costs.”
Head of strategic litigation at solicitors Beachcroft Andrew Parker, commenting on the MoJ reform, said: “It’s still early days, but this suggests that it’s going in the right direction.”
The findings were presented on the same day that the government published its Justice Bill, which takes forward the Jackson Review of on civil litigation costs. The bill’s provisions include a ban on lawyers recovering success fees, but contains no progress on curbing referral fees.