Neil Sugarman, the President of the Association of Personal Injury Lawyers (APIL), has accused the Association of British Insurers (ABI) of using a “sickening tactic” to shift the blame for the insurance industry’s failure to control motor insurance premiums onto injured people.
Motor insurance premiums hit their highest recorded levels last quarter and rose more than five times the rate of inflation in 2016. The average price paid for private comprehensive insurance was £462. The highest figure previously recorded was £443, in the second quarter of 2012. The average premium over the whole of 2016 was 9.3% higher than the average premium over the whole of 2015.
The ABI has said that the Ministry of Justice could be about to pile more pressure on motor premiums through a cut in the discount rate – the mechanism used by the courts to adjust large compensation payments to take account of future investment returns.
But Sugarman has strongly criticised the ABI for trying to deny people with serious injuries from getting the correct level of compensation with the threat of higher car insurance premiums.
“People with life-changing, debilitating injuries face a shortfall in their compensation which in some cases could mean decades of their care needs are not accounted for, because the discount rate for personal injury is too high. The pressure and stress of this uncertainty for families is immeasurable,” he said.
“For insurers to try to deny these people of their very real need for compensation with the threat of higher car insurance premiums is a sickening tactic to shift the blame for the industry’s failure to control premiums.”
Rob Cummings, an assistant director at the ABI and head of motor and liability, said that motorists were bearing the brunt of a cocktail of rising costs associated with increasing whiplash style claims, rising repair bills and a higher rate of Insurance Premium Tax.
“While we support the Government’s further reforms to tackle lower value whiplash costs, it must not give with one hand and take away with the other,” said Cummings. “The sudden decision to review the discount rate has the potential to turn a drama into a crisis, with a significant cut throwing fuel on the fire in terms of premiums.”
However, Sugarman responsded to Cunnings’ comments by saying that there was nothing suddent about the “long-overdue review” of the discount rate.
“Insurers have got away with undercompensating people with catastrophic injuries for years and they know it. There are some public and private sector compensators, including the NHS Litigation Authority and Direct Line, who have managed to account for the likelihood of a change to the discount rate when determining their reserves for futures liabilities,” he said.
“Excuses from the ABI that the insurance industry has not had chance to prepare for a new rate do not wash.”
He added that the ABI’s treatment of injured people as a “mere nuisance” was nothing new.
“Latest data from the ABI is a shameless pick n’ mix of figures which obscure the long-established fact that personal injury claims are not the reason for rising premiums.
“The ABI’s own data shows that the cost of motor-related injury claims have been falling since 2013. But the ABI cannot sink much lower than it has right now. It has turned its guns on people with disabilities and life-long care needs, the result of needless injuries inflicted by their members’ policyholders.
“Clearly the ABI would rather insurers did not honour their responsibilities to pay full and fair compensation.”