Want to know the REAL reason why your car insurance premium has gone up??

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http://www.bbc.co.uk/news/business-12703857

11 March 2011 Last updated at 08:30

Car insurance firms encourage claims, MPs claim



Insurance firms have been criticised by MPs for allegedly encouraging injury claims after car accidents.
A report from the Transport Select Committee details how firms are paid "referral" fees for giving lawyers the names of people involved in crashes.
These people may then be persuaded to sue for compensation.
But the insurers' association said more should be done to tackle the "compensation culture" which it said was behind the rise in legal costs.
"The committee has failed to recognise that the main cause of the recent increases in motor insurance premiums is ever-increasing personal claims and spiralling legal costs," said Nick Starling from the Association of British Insurers (ABI).
The association said the rise in legal costs had added £40 a year to average motor premiums.
The committee said insurers must do more to tackle fraudulent injury claims, which were also driving up the cost of motor insurance. It wants a dedicated police unit, paid for by insurers, to tackle the issue.
Simon Douglas, director of AA Insurance, welcomed the idea of a special police unit.
"With insurer control, such a unit could very quickly pay for itself. Fraud, particularly false personal injury claims, is in my view the biggest driver of premium increases," he said.
'Merry-go-round' The committee received evidence from the police and the AA for its report The Cost of Motor Insurance.
"The police made plain to the committee that 'staged accidents' are on the increase and that, so far, we have been lucky there have been no fatalities resulting from such incidents," committee chairman Louise Ellman said.
It is also calling for more transparency on "the merry-go-round" of referral payments.
"Consumers are largely unaware of how much money moves around the insurance industry in this way when they make a claim. They deserve to see where their money is going," Ms Ellman said.
The ABI said these fees were a symptom of a "dysfunctional compensation system", not the cause of it, and should be banned altogether.
The committee also looked at the AA's British Insurance Premium Index, which showed that the average Shoparound premium - an average of the lowest three quotes for each risk - increased by 33% over 2010.
Young drivers saw the biggest increases. Those aged between 17 and 22 saw their premiums rise by more than 58%, the AA said.
The committee also wants the government to make the driving test more rigorous to help bring down the "appalling" casualty rate among young drivers.
However, Mr Douglas from the AA, which also operates a driving school, cautioned that making the driving test too difficult could lead some young drivers to skip it and try to drive without a licence.

cyclonebri1

It's been happening for a while and is quite unbelievable in my view. There are moves afoot to outlaw the practice but I somehow don't see ins premiums reducing by the 30 they increased last year:mad:

daveyjp

Two weeks ago a neighbour reversed into my wife's car. Damage was minimal - if he had been reasonable it could have been sorted by him giving us £150 to get the small area of paint scuff resprayed. He was far from reasonable so it has gone through insurance.

First call was from a credit hire company - equivalent car would be provided - cost? £100 a day for an Aygo! No questions as to whether our car could be driven - when we called to cancel the hire car there was real hard sell to get us to take it.

This was three weeks ago, if we had taken this car the claim would now be at £2,100 just for the hire car for a job which could cost £150!

That's why insurance is rising - it's become so bureacratic. There are many layers of companies involved in a claim and all of them are creaming off thousands from the pot.

jazzy

What gets me with most repair companies is that they charge more if the work is being done through an insurance company. Very often I have been given a cheaper quote if the work is done privately.

DirectDebacle

Since the 70's RTC deaths and serious injuries have reduced significantly to a point where for around the last 10 years they have remained more or less at the same level.

Much of this reduction is because of the major improvements to safety features built into vehicles.

However the most important safety feature, the driver, has undergone little improvement. To reduce RTC and therefore insurance premiums, there needs to be radical improvement to driver training. Raising the bar to IAM/RoSPA standards to obtain a licence, 10 year maximum for licences and then a re-test would result in a major reduction in insurance claims. The parties with vested interests would not like this, too much profit to lose. So the hypocrisy continues.

wba31

I do believe that it comes in part about the necessity for insurance. As it is legally required, they can charge what the frig they like, as they know we all need it. are there any 1st world countries where insurance isnt legally required? I've heard the US don't make it mandatory? and i have also heard its really cheap there. but i may be wrong...

Indout96

when we called to cancel the hire car there was real hard sell to get us to take it

Agree with this, my daughter was swiped by a lorry and went to pick up her hire car (she drives a Celica) on arrival she was given a brand new Saab 93 twin turbo diesl car as "like for like" (not quite sure how they worked that out LOL) when she asked if she could just have a corsa type car as it was only to & from work for about a week she was told no, it has to be the Saab - god knows how much that cost for the week

Mankysteve

Is it Australia where third party is covered by your road tax sounds like a good idea to me. If something is compulsory and private bodies have proved they can't provide at a reasonable price or service then the government should provide at roughly at cost level. They can still take into consideration risk amount on individuals.

nicolax

friend of mine got into an accident where someone in the right lane of a roundabout decided to turn left, spinning her and shunting the car off the road. The car was written off - although it was on the borderline between write off and repair

... one of the first things the insurer asked was did she want to go for compo! even though she said no, that she was fine and not injured just shook up, they still tried to push it!!

rev_henry

Mankysteve wrote: »

Is it Australia where third party is covered by your road tax sounds like a good idea to me. If something is compulsory and private bodies have proved they can't provide at a reasonable price or service then the government should provide at roughly at cost level. They can still take into consideration risk amount on individuals.

Yes it is Australia, but not all states I think. IIRC it only covers personal injury, not even the actual car. Also means, theoretically, that 15 year olds can drive ridiculous japanese imports , although I think their graduated licence scheme prevents this to some extent...

JQ.

Mankysteve wrote: »

Is it Australia where third party is covered by your road tax sounds like a good idea to me. If something is compulsory and private bodies have proved they can't provide at a reasonable price or service then the government should provide at roughly at cost level. They can still take into consideration risk amount on individuals.

Firstly, car insurance is provided at cost, well it's actually worse than that, the insurance companies run it at a loss.

Secondly - can you imagine if our government got involved - there'd be 25 layers of beaurocrats involved at a cost of billions. There's absolutely no way the costs would go down.

Thirdly - it's very simple to solve - there should just be a complete overhall of the car insurance system - Banning accident management companies, no win no fee solicitors and all the rest of the leeches