Car Insurance Premiums Rising
Car Insurance Premiums Rising
Car Insurance is always a hot topic around any dinner table, many people dread that time of year when you policy is due for renewal and you dont know what your next premium will be. Historically if you had not made a claim in that previous year you could expect your premium to reduce slightly as you are adding a further year of "no claim".
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In today's world however this is not the case, the Car Insurance market is extremely competitive and companies try to make as much money out of each client as possible. News is breaking that premiums are rising as insurers are hit with higher costs. This new story is resulting from the high pressure on companies from personal injury lawyers, rise in fraudulent cases (including fake accidents).
Firstly personal injury claims are being blamed for a big rise in premiums however when you read the information the insurers seems to be shooting themselves and their customers in the foot. The practice that has emerged is that insurers are selling referrals to solicitors when they receive a claim (re an accident). Each referral can demand as much as 1000 fee depending on the size of the claim to the solicitor.
The House of Commons Transport Committee criticized aggressive personal injury firms saying they should try and reduce the amount they will pay for a referral. They also claim the increase in no win no fee practices has pushed a dysfunctional compensation system' into the UK market which involves a tight knit market of claim and referral passing.
Many people would argue that the amount of money that changes hands is relative, the personal injury firms know early on how strong a claim is and how much they can expect to win. They will then assess how much they are willing to pay to have that case, obviously the easier the case and the bigger the win, the higher the fee.
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Louise Ellman the committees chairman raised the point that the consumer will rarely know how much if anything has been paid for their case, she also raised that the consumer should know this information. However we feel that this might be mute point as many personal injury firms do not charge the client a penny, they will claim the majority of their fees from the losing party.
So you have to ask the question if you are a claimant due you care that the solicitor you meet has paid 1000 for your claim. They clearly feel you will win and if you are keeping 80-100% of your pay out should you worry about the money passing around.
We do feel that a greater transparency in this market should be pushed through so that consumers are better aware of the processes and what should happened if they make a claim. You will also want to know that you are being passed to a good solicitor with a decent win percentage.
The committee has called for greater Government input if the industry cannot self regulate better.
The second issue is that of fraudulent claims, there have been a few high profile cases recently of people causing and claiming false accidents. Only in the last month a case has been brought against a gang in Manchester thought to be at the centre of a multi mullion pound false claims ring.
The Police have confirmed that staged accidents are on the rise. People are much more vulnerable to be pulled into these scams with the promise of a share of the spoils of their fake claims. In certain cases what seem like legitimate companies have been set up to feed these false claims to genuine solicitors and claim the referral fees.
With all of the above costs being pushed into the Car Insurance market there has been an adverse effect on premium prices. The AA has reported that fully comprehensive premiums have risen by as much as 29.9 per cent up to October 2010. There has to be more emphasis placed on consumers to Compare Car Insurance prices to make sure they are not paying more than they need to.
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