Conclusions and recommendations
Introduction
1. None
of our witnesses suggested that it would be desirable for the
Government to regulate the provision of motor insurance so that
premiums were lowered. Nevertheless, there is scope for the Government
to:
- investigate the role played
by legal and regulatory rules in generating the continuing increase
in personal injury claims relating to motor accidents and to assess
the impact of changing these rules on access to justice;
- assist the police and the insurance
industry in tackling fraud more effectively;
- clamp down on uninsured driving;
and
- ensure that the driving test
properly prepares young drivers for motoring and look at other
ways of ensuring that young drivers are encouraged to drive safely
and can demonstrate to insurers their commitment to doing so.
(Paragraph 12)
Personal injury claims and referral fees
2. The
provision of wider access to justice is to be welcomed, but it
has come at a cost. Motor insurance premiums must now pay for
compensation for personal injuries and legal costs on a far greater
scale than before. (Paragraph
21)
3. In our
view, the Government should ensure that arrangements exist to
enable people injured in a motor accident to claim compensation,
regardless of their income. However, wider access to justice should
not provide an opportunity for people to make fraudulent claims
for compensation for non-existent or pre-existing aches and pains.
(Paragraph 22)
4. Insurers
should publish on their websites a list of the firms with which
they have referral arrangements, an indication of the level of
the fees paid, and a clear explanation of how referral arrangements
work and their purpose. Policy holders should be sent this information
with their insurance documents. When claims are made, insurers
should make it clear to claimants that they need not use the solicitor,
vehicle repairer or credit hire firm which is recommended by the
insurer. We look to the insurance industry to implement a more
transparent regime for referral fees by the end of next year and
to the Government to step in, with legislation if necessary, if
the industry is unwilling or unable to agree on this.
(Paragraph 28)
5. We recommend
that the Department sponsor a research project on international
experience in restraining the number of personal injury claims
relating to motor insurance, with the aim of publishing a discussion
paper on this issue during 2012 outlining possible options for
change. (Paragraph 31)
Uninsured driving
6.
We welcome the action which has been taken in recent years to
reduce uninsured driving.
(Paragraph 33)
7. We welcome
the introduction of Continuous Insurance Enforcement: it is a
sensible measure which should help reduce the prevalence of uninsured
driving. We
recommend that the introduction of CIE should be accompanied by
a promotional campaign, aimed at young drivers, to alert them
to the requirement to have valid motor insurance. We also recommend
that the first letter sent to registered keepers who appear not
to have motor insurance should focus on reminding drivers of the
legal requirement to insure their vehicles and should not be based
on the assumption that all recipients have deliberately flouted
the law. Once vehicle owners have been reminded of the requirement
to take out insurance pursuit of those who fail to do so should
be vigorous. (Paragraph 36)
8. Although
we can see the argument to increase the minimum penalties for
driving, and for keeping a car, without insurance, the Government's
focus should at this stage be on better enforcement of the existing
law. We recommend that the penalties for these offences should
be reviewed one year after CIE has been implemented.
(Paragraph 37)
Fraud
9. We
welcome the Government's aim to ensure that insurers can gain
access to information held by the DVLA about drivers when insurance
is being arranged. We recommend that, in reply to this Report,
the Government should specify more precisely when the new data
sharing arrangements will be introduced.
(Paragraph 42)
10. There
appears to be significant scope for the insurance industry to
do much more to combat motor insurance fraud. We call on the main
players in the industry—particularly the insurance firms,
brokers and comparison websites—to work together more proactively
to achieve this. In particular, we welcome the initiative to establish
a dedicated police unit on insurance fraud, paid for by the industry.
We note the Minister's commitment to look at this proposal: he
has a responsibility to law-abiding drivers to ensure that fraud
is taken seriously by the industry and minimised. We recommend
that, in reply to this Report, he update us on progress in discussions
on this issue and on the action the Government has taken to assist
in ensuring that a successful outcome is achieved, preferably
by the start of the 2012-13 financial year.
(Paragraph 44)
Young drivers
11. We
welcome the Minister's commitment to making the driving test more
rigorous, exploring other ways of ensuring that young drivers
are fully trained before they are licensed, and to making an advanced
driving course available which can effectively signal to insurers
that drivers who have completed it are safer. Many of these ideas
were discussed in our predecessors' Report into novice drivers.
The Minister's commitment must now be backed up by a consultation
document setting out the measures the Government wishes to explore,
a timetable for implementing any legislative and procedural changes,
and an indication of likely costs and how they will be budgeted
for. We recommend that the Government publish such a document
within the next six months, with a view to implementing changes
to the driving tests and other measures during this Parliament.
We will pay close attention to the Government's proposals.
(Paragraph 49)
12. We recommend
that the Department for Transport facilitate investigation of
effective means of deploying and publicising new technology which
can assess how cars are driven by young drivers and thereby provide
more information on which risk assessments can be made. For example,
we suggest that the Department could host a conference on this
issue involving all relevant parties, during the summer, and establish
and participate in an industry working group on how this technology
can be most effectively used. (Paragraph
52)
Conclusion
13. Although
the Government is not responsible for the cost of motor insurance
there are several good reasons for it to be concerned at the recent
increases in premiums for what is a compulsory requirement on
drivers and we have identified a number of actions it can take
to help bring premiums down. In particular, the Minister pointed
out that other departments are responsible for issues such as
referral fees and action against insurance fraud but we look to
him to press the case across Whitehall for the measures we have
recommended. Within his own remit, the Minister has already acted
decisively to help reduce uninsured driving. We now look to him
to turn his attention to making the driving test more rigorous
and bringing down the casualty rate amongst young drivers, something
which in our view should be central to the Government's forthcoming
road safety strategy.
(Paragraph 53)
14. The
insurance industry also has a big part to play in bringing premiums
under control. If referral fees continue they should be more transparent.
We are not convinced that the increasing prevalence of referral
fees throughout the sector has left premiums unaffected and we
suspect that the market will be less "dysfunctional"
if consumers have a better grasp of where their money goes. We
would also like to see the insurance industry do more to tackle
fraud. The Department for Transport should bring pressure to bear
on the main players to work together, and with the police and
other authorities. (Paragraph 54)
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