The cost of personal injury claims in the UK has risen by three times the rate of national average earnings. That's according to a new study on personal injury awards.
The study, commissioned by the International Underwriters Association (IUA) and the ABI, found that almost one third of the premiums paid by motorists is spent on paying claims.
Claims costs have risen by 9.9% in the last decade, the report said, with a 117% hike between 1992 and 2000, when the national average earnings rose by 37%. Over the same period, the frequency of claims rose by just 3%.
The report also suggested more claims are reaching reinsurance layers, after payments by reinsurers had increased by 20% per year over this period.
Also, legal fees remained constant at 30%, meaning they rose at twice the national average earnings level, costing insurers 9% of their premium income each year.
Commenting on the report, Mike Brockman of actuary specialist, English Matthews Brockman, said: "The average consumer doesn't realise the impact that personal injury claims and personal injury inflation has on premiums.
"Not many believe that a large amount of their premium is used for personal injury claims settlement."
