The cost of car insurance is set to fall as Chancellor George Osborne challenges ‘The Compensation Culture’ in his autumn statement by putting an end to ‘minor whiplash’ claims.
- Motorists will see their insurance policies fall by as much as £50 per year
- ‘Minor whiplash’ and ‘soft tissue damage’ make up 80% of personal injury claims
- According to the Association of British Insurers, whiplash claims cost as much as £2bn a year in total
- Savings should offset the rise in insurance premium tax as soon as this month
- Fuel Duty remains frozen for now
- There will be a boost in road investment and pothole funds
The Chancellor announced that motor insurers would be spared more than £1bn in costs due to the prevention of cash compensation for minor whiplash injuries; resulting in significant cost savings for motorists insurance.
According to Confused.com, the insurance comparison website, the annual car insurance policy in the UK costs £629 meaning customers would save approximately 8 per cent on the cost of their annual policies if all of the planned savings were realised and passed on.
The decision has been welcomed by Car Insurance providers who have experienced a spike in exaggerated fraudulent claims that the government describe as ‘blown of out proportion to any genuine injury’ suffered.
Said Steve Maddock, Director of claims, at Direct Line:
We have quite an extreme compensation culture in the UK, both in terms of the frequency and levels of claims”
Aviva said the move will not only help cut the cost of insurance for all motorists but it would also benefit those making non-fraudulent claims by ‘enabling genuinely injured people to get the support they need through their insurance’ after claiming it currently had more than 16,000 suspicious motor claims under investigation – the equivalent to 44 claims every day.
Aviva CEO Mark Wilson said:
We welcome this bold and necessary step by the Government on behalf of honest people – it is all about standing up for the consumer against the fraudsters.
The Government is putting the brakes on the whiplash gravy train. It is great news for consumers.
Sadly, law abiding motor customers have paid for the UK’s dysfunctional and fraudulent motor claims system through inflated motor premiums. Fraud is not a victimless crime.”
The AA said the reforms were a ‘big step in the right direction’.
Earlier this year, its research discovered 11 per cent of motorists said they would make an injury claim following a collision caused by someone else, even if they were perfectly fit and well.
Stephen Gaywood, the AA’s Director of counter-fraud said:
By giving successful personal injury claimants care such as physiotherapy, which compensation is supposed to pay for, those out to make a fast buck from an injury claim that may not have happened, will immediately be discouraged.”