David Ward

Car Insurance - It Can't Go On Like This

The Background

Many car owners have experienced an unpleasant shock when their car insurance premium are due for renewal. Even in cases where the owners have had a long claim-free history, premiums have risen by 10%, 20% or 30%. The cost of car insurance in some parts of Bradford is getting out of hand and our city has seen the highest rise in prices in 2011 of all the regions (a 17% increase). We have people who haven't made a claim in 30 years being refused insurance, young drivers are being quoted premiums of over £20,000 for their first car and many responsible drivers have seen their premiums going through the roof just because of their post code.

The causes? Take your pick. Uninsured drivers, referral fees, personal Injury claims, credit-hire companies, fraudulent claims, cash for crash scams, compensation culture and so it goes on. It is clear that there are multiple contributory factors and there will need to be a range of solutions if we are to bring back some degree of sanity to insurance premiums. Below is a graph of is a graph of car and home insurance premium trends since 1994:

The Facts

Over the past 10 years personal injury claim payouts have doubled from £7 billion to £14 billion while road accidents have largely reduced over that period.

Car insurance prices have risen at a higher rate than inflation in many regions over the last twelve months.

The cost of comprehensive cover rose by 4.9% over all in 2011, with third party, fire and theft (TPFT) premiums increasing in cost by 10.2% year-on-year.

Yorkshire - and Bradford in particular - has been harder hit than most areas, and by some estimates our premiums are increasing at as much as double the national average.

Motorists in Bradford have suffered a hike of 17.1 per cent in comprehensive car insurance premiums last year - the biggest percentage increase in the country.

The effect on the younger drivers has been particularly severe and there are growing signs of what one insurance executive has called an "uninsurable generation".

The Campaign

"It can't go on like this!" This is the frequent and often desperate comment I hear so often from motorists when faced by a car insurance premium quote that, in many cases, verges on the absurd. We are campaigning hard in Bradford where there are particular concerns but in truth ever increasing premiums is a national issue.

There are things that can and should be done to bring premiums down - such as banning referral fees, imposing tougher punishments on uninsured drivers and tackling fraudulent claims.

Last year, I organised a summit into car insurance prices to investigate why costs were soaring. I had received many complaints from my constituents, one of whom was quoted £26,000 to insure his son's first car. At the summit I called for a ban on referral fees - a step the Government announced in September last year it would take - meaning personal injury solicitors will no longer be able to pay for the details of people who have been involved in car accidents.

The response I have received from the survey is clear: premiums have now reached such a level in Bradford that even the most experienced and responsible of drivers are questioning whether they can afford to run a car. We desperately need to get the cost of personal injury claims under control. The number of whiplash claims has been going up and up while the number of accidents has been falling for decades. That is clearly the result of fraud - we have allowed Britain to become the whiplash capital of Europe.

Latest Update

When responsible drivers are being forced off the road by the cost of insuring their cars, the Government has to act and the following measures have been agreed by the Government and the car insurance industry to help tackle the cost of motor insurance:

· an industry commitment to pass savings onto customers resulting from a Government commitment to reduce the current £1,200 fee that lawyers can earn from small value personal injury claims;

· industry commitment to adjust premiums to reflect any reductions in legal costs created through the Jackson reforms that will reform 'no win, no fee' and ban referral fees; and extending the road traffic accident claims process to cover employers liability and public liability;

· the Government and insurance industry committed to work together to identify effective ways to reduce the number and cost of whiplash claims; and

· the Government and insurance industry agreed to work together to look at what more can be done regarding young drivers' risk and safety. This includes the wider use of telematics or 'smartbox' technology.

There is of course still a long way to go on this issue but I am pleased the Government is listening and has finally taken some initial steps to help relieve some of the costs associated with car insurance.