This article originally appeared in Modern Claims Magazine, Issue 12, March 2015
The start of 2015 has seen a mini-blizzard of new reports intended to suggest the latest trends in motor accident claims. The AA has said that the average motor insurance premium was £540 in the last quarter of 2014, down 10% on 2013. Towers Watson said that the figure was £594 having fallen by 7.9% over 2014. In early February the ABI said that the average premium was £372 down 4% during 2014 from 2013. Whilst the differences will undoubtedly be explained by the use of different methodologies, there are clearly great variations in these figures.
But there does appear to be a trend. The average motor premium (which is somewhere between the vastly different £372 and £594) fell during 2013. We don’t know exactly by how much but it is somewhere between 4% (ABI) and 10% (AA). It is obviously welcome that premiums are falling for motorists and that, as the ABI noted, £595 million of savings have been passed on to motorists. The argument about whether the full savings from the round of legal reforms have been passed on to consumers is perhaps for another day.
The reports from the ABI, AA and Towers Watson were further supplemented by an Institute and Faculty of Actuaries report in January that stated that there has been a 12% reduction in the frequency of bodily injury claims, a 19% reduction in the overall costs of whiplash-style injury claims and a 65% reduction of fixed legal costs for each claim made.
Although we may be able to identify general trends, such wildly different figures present a very real problem for good policy making. The concept that public policy by Government and Parliament must be “evidence-based” is widely accepted. But on the basis of these figures above, which figures should be used to form public policy towards motor accident claims going forward?
The selection and use of statistics is vitally important. In the recent past some key stats have had very real and detrimental impacts upon claimants. In 2011 the ABI produced the figure, based on an average paid premium of £440, that whiplash claims represented approximately £90 of the average premium. This figure became the cornerstone of the Government’s assault against motor accident claims, although precisely how it was justified remains unclear to this day.
If the old adage about lies, damned lies and statistics is not to be repeated yet again, it is important that there is clarity, precision and agreement about the current state of the market. For good policy to be developed, Government, Parliament and stakeholders alike, need access to the full picture, not selective spin.
Susan Brown, Chair of the Motor Accident Solicitors Society (MASS)