Myclaim Market Update October 2009
Big shake up to road traffic accident claims
After consultation with relevant parties in the industry, the Ministry of Justice has set out its new procedure for dealing with road traffic accident personal injury claims. This new scheme applies to cases where the claim for the injury is between £1,000 to £10,000. The main aim of the scheme is to speed the process up and it also provides for fixed costs for dealing with each stage of a claim.
This of course is a substantial change for the industry meaning representatives for both claimants and defendants will need to carry out a lot of work to adjust to the new system. The Association of British Insurers has proposed that the principles of this new scheme should be applied to claims brought by workers and employees injured at work.
Uninsured Drivers increasing in numbers
The Motor Insurer’s Bureau has stated that the number of drivers who are driving without the proper insurance is increasing significantly. Further studies suggest that those driving uninsured cost insured drivers an extra £30 on average on their insurance. Astonishingly one of the worst areas is in Bradford where an estimated 50% of drivers are expected to be uninsured. Efforts to deal with this problem include seizing around five hundred vehicles a day and prosecuting nearly a quarter of a million uninsured drivers.
The Motor Insurers Database is also a database of vehicles with their insurance details which allows the police to quickly check whether a vehicle has been insured or not.
Aviva joins 10:10 campaign
The insurance company Aviva has joined the 10:10 campaign aimed at reducing carbon emissions. Anyone taking part has to pledge to reduce their carbon emissions by 10% by the end of 2010.
HSBC Insurance not taking on new motor insurance customers
In a move to refocus its business HSBC Insurance will not be taking on new motor insurance customers so that it can focus on life insurance, pensions and investments. It is hoped that staff can be redeployed throughout the company.
Cash for Crash
A fraudulent way of making a claim for personal injury has emerged with criminal gangs arranging road traffic accidents. These often occur when two cars are driven in a convoy by members of the gang. They then target a victim’s car and stop suddenly in front of it, which usually ends up with the victim’s car crashing into the gang’s car. Fraudulent claims including for personal injury then follow and it is estimated that this is costing the British insurance industry £350 million.
RSA Insurance shares lose value after acquisition rumours
Shares in RSA Insurance lost value after their management indicated they were on the lookout to make more acquisitions for the company up to a value of £600 million.
Compensation Scheme comes under attack
The British Insurance Broker’s Association (BIBA) has hit out against the way the Financial Services Compensation Scheme which provides for redress when financial companies collapse. In the main this is because the compensation is provided by companies across the board, that is a method of cross subsidy. This means that sectors which are considered low risk, which BIBA states includes insurance, has to provide compensation for sectors deemed to be high risk which in the present economic conditions means banks.
BIBA is calling upon the Financial Services Authority to review the way this procedure works.
Small law firms under threat from rising insurance costs
The recession has lead to an increase in professional negligence claims which has, in turn, lead to an on average twenty percent increase in insurance premiums for law firms. Other changes include insurance providers simply refusing to provide cover for smaller firms, such as RSA who will no longer insure firms with fewer than three partners.
Traditional high street firms carrying out a lot of conveyancing, which is perceived as high risk, are finding this particularly difficult especially at a time when cash flows are strained and access to credit is not as forthcoming as it once was.