With the UK economy struggling to get off its knees and many businesses working tirelessly to compete in tough trading conditions, a sharp hike in your annual insurance premium can feel all the more painful.
This is however the situation for many businesses in the UK with the average motor insurance premium increasing by an average of 55% since 2009, hitting the pockets of even the most careful drivers with clean licenses and a healthy no claims bonus. Leading motoring organisations have laid the responsibility for these price rises on fraudulent insurance claims, taxes and legal fees.
Hugh J Boswell Director, Peter Foster explains: “In recent years there has been a significant rise in personal injury claims arising from road traffic collisions, despite there being fewer casualties from such accidents. With up to 70% of these related to whiplash injuries, it is widely reported that insurance companies are in fact paying out more than they are collecting in premiums. This in turn has led to a steep increase in insurance costs for the customer. The question and concern surrounding the percentage of whiplash claims which are either fraudulent or perhaps exaggerated, has led to many within the motoring industries to call for government intervention to stem the flow of unjustified and unreasonable claims.
A recent House of Commons Transport Select Committee inquiry into car insurance, found that one of the main factors affecting the market is the aggressive approach of some personal injury law firms, which encourage claims, even in cases where an injury may not have occurred. The inquiry concluded with a number of actions and proposals to halt escalating UK motor insurance premiums.
These recommendations include a ban on referral fees to secure business in personal injury cases. Legislation for this has been brought forward and is now with the House of Lords. New standards are also proposed relating to the evidence required and damages payable for whiplash claims. The Office of Fair Trading (OFT) has called for further evidence to establish the background to the reports of rising insurance premiums and whether further work may be necessary to improve the effectiveness of the market.
Many whiplash claims are of course genuine and some argue that those victims will suffer further as a result of this legislation. Some also question whether savings will be passed on to the customer by the insurance companies.
In conclusion, there is positive change afoot to address the issue of rising insurance premiums and the financial burden falling at the door of the innocent motorist, but in all circumstances the first priority to protect your business from unnecessary cost is to ensure you have the appropriate insurance cover in place.
Peter says, “The sale of seemingly cheap ‘one size fits all’ commercial insurance packages offering stripped down, basic cover, without addressing specific business needs, is a growing concern for us as responsible insurance brokers because businesses could potentially be left uninsured, or with unsuitable cover in place. We always recommend companies speak to a broker that understands their specific business needs and can provide the correct level of cover.”