The cost of car insurance could fall by up to £50 a year after insurers vowed to pass on any savings they make from a new ban on whiplash claims. Leading insurance companies including Aviva and LV have promised to pass on any savings following the Chancellor’s decision to end the right to compensation for minor injuries.
The crackdown on ‘the culture of fraud’ could see car insurance premiums fall as more than £1 billion in costs are lifted from insurers. Keep reading to find out more.
Leading insurers promise to pass £1 billion in savings to drivers
In his Autumn Statement, George Osborne announced that insurers were to be spared £1 billion in costs with the end of the right to claim cash compensation for minor whiplash injuries caused in road accidents.
Following a meeting with Government ministers, leading insurance companies including LV and Aviva have promised to pass on all of the savings made by this law change to motorists in the form of lower premiums.
Lord Faulks, a justice minister, said: “We are determined to crack down on the culture of fraud and exaggerated claims in the motor insurance industry, which means car owners are forced to pay higher premiums to cover the false claims of others.
“This culture is boosted by an industry that encourages exaggerated claims through cold calling and it is right that we tackle this. Insurers back these much-needed reforms and have committed to handing over savings to motorists quickly.”
Research from Aviva has found that four in five (80 per cent) personal injury claims from motor accidents are for minor whiplash injury claims, compared to just 3 per cent in France.
James Dalton, Director of General Insurance at the Association of British Insurers, said: “The Government reforms are a significant breakthrough in tackling the UK’s compensation culture and are good news for motorists.
“Reforms to the Small Claims Track Limit and the end to cash compensation, for low value injuries, will help to bring down unnecessary costs in the motor insurance market and honest motorists should be the beneficiaries.”
Relief for drivers after recent car insurance premium rises
The news that insurance costs could fall after the Government’s decision will come as a welcome relief for motorists who have seen policy costs rise in recent months thanks to the increase in Insurance Premium Tax.
The recent rise in the tax from 6 per cent to 9.5 per cent has added an estimated £20 to the cost of car insurance, according to the AA.
Mark Wilson, Chief Executive Officer of Aviva plc, 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.
“Let me be clear, Aviva will pass on 100 per cent of the savings from this Government initiative to our customers, reducing customers’ average premiums by around £40-£50 when it is implemented.
“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,” he added.