The cost of motor insurance - Transport Committee Contents

Written evidence from Mark Thompson (CMI 30)

I am a claimant personal injury solicitor of 27 years experience. I am now a sole practitioner having previously managed a large personal injury department working for claimants. I have an obvious interest in attracting clients to my practice. I also use a marketing style of my practice, called Your Key.

I will limit myself to two of your four points:

  1. ¾  The reasons and consequences of recent increases in the cost of motor insurance.
  2. ¾  The extent to which the cost of motor insurance is influenced by the prevalence of road accidents, insurance fraud, legal costs and the number of uninsured drivers.

I read with concern the "evidence" presented to the Committee, available at I am concerned the evidence submitted does not provide a comprehensive picture. Too much of the evidence is based on selective statistics. Statistics expressed as percentages are headlines, and opinions based on estimates or anecdotes are of little or no value.

Here are some of my personal estimated statistics. My ability to run 10 miles has been reduced by 90%, my lung capacity has been reduced by 40%, and my life expectancy by 15%. Statistically dramatic, particularly if I omit to tell you how many cigarettes I smoke and my age.

One of the most dramatic statistics, and quoted several times, tells us of an extraordinary increase in the injury cases paid by an insurer called esure. To understand that statistic you need to know esure has only been in the market for 10 years, and has seen considerable growth in policyholders, particularly in the last few years. It is therefore not surprising the claims they receive and pay have increased.

My final point is that the historical information gives no credit for the recent introduction of the "streamlined" process for road traffic cases with a value below £10,000.

Rather than add to the lobbying I would like to assist the Committee to gain a comprehensive view of the issues. I therefore provide twenty two questions which I believe will assist in the provision of a comprehensive picture:

  1. 1.  What proportion of road accident claims will fall into the recently launched streamlined process introduced by the Ministry of Justice?
  2. 2.  Are the figures provided by the Motor Accident Solicitors Society accurate - 674,977 motor accident personal injury claims of which 75% will fall into the streamlined process, and if you do not agree what is the correct percentage?
  3. 3.  If the average solicitor costs are no more than £1,350 in cases settled within this streamlined process, what difference would that make to the underwriting profit and loss of insurance companies for their last financial year?
  4. 4.  When figures are shown for cost of settlement, do they include solicitor costs, VAT, police accident reports, medical record fees, medical report fees, repayment for treatment to NHS, repayment of State benefits under recoupment regulations, and if so please identify the proportion of the cost applicable to each of these elements?
  5. 5.  Is the payment of referral fees a profitability issue for solicitors rather than insurance companies?
  6. 6.  Is it correct that referral fees cannot be recovered from the "other side" and are absorbed by solicitors as part of their marketing cost?
  7. 7.  What proportion of referral fees are paid to insurance companies, and what proportion to insurance brokers?
  8. 8.  What is the amount in £s of referral fees paid in the last three years to insurance companies, and what is the amount paid to insurance brokers?
  9. 9.  Is it necessary for insurance companies and brokers to tell their customer that a referral fee will be paid to them by a solicitor, and the amount?
  10. 10.  The memorandum from the Auto Body Professionals Club refers to "rebates required by insurers from suppliers to the body shops repairing cars." Are such rebates received by insurance companies, and if so how much in £s per annum?
  11. 11.  Do body shops pay rebates on their invoices to insurance companies, and if so how much is paid in £s per annum?
  12. 12.  How much commission is paid by credit hire companies to insurance companies in £s per annum, and how much is paid to insurance brokers in £s per annum?
  13. 13.  Bearing in mind your answers to questions 7, 8, 9, 10, 11 and 12, is it accurate and fair to present your figures on the basis of premium income against claims paid (underwriting profit or loss)?
  14. 14.  Which of the organisations presenting evidence to the Committee are providing a fair and accurate picture of the income and costs of insurance companies?
  15. 15.  Of the evidence presented is the most balanced response from the Auto Body Professionals Club?
  16. 16.  Of those who make injury claims after a road accident, what proportion first contact their own insurance company?
  17. 17.  How many insurance companies have contracted-out the handling of these first telephone calls to claims management companies?
  18. 18.  How many insurance companies which handle their own post-accident calls identify potential claimants and provide a system to arrange credit hire, credit repair, and solicitor representation?
  19. 19.  Does either practice identified at 17 and 18 above have a tendency to increase the number of claims made against insurance companies?
  20. 20.  How many claims for compensation are made by the route identified at question 17, and how many by the route identified at question 18?
  21. 21.  What proportion of each insurance company's overheads is spent on identifying fraudulent claims?
  22. 22.  If the Government introduce measures which reduce the number and extent of personal injury claims, reduce the costs paid to representatives of those claimants, how do you suggest the Government should regulate the fairness of motor insurance premiums in future?

December 2010

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2011
Prepared 11 March 2011