Cost of motor insurance: follow up - Transport Committee Contents

4  Conclusion

28.  The cost of motor insurance matters to millions of people across the UK. The increase in premiums in recent years has bit deep into disposable incomes which are already under severe pressure because of the prolonged economic downturn. When we first launched this inquiry, in late 2010, the cost of motor insurance had been the subject of little parliamentary or Government attention. Because of our inquiry and report that has now changed: the issue is now firmly on the political map and we intend to keep it there.

29.  Numerous factors affect the cost of motor insurance and tackling some in isolation would not be guaranteed to bring premiums down. On 8 November we initiated a debate in the House in time allocated by the Backbench Business Committee on a motion which called for the establishment of a cross-departmental ministerial committee on reducing the cost of motor insurance and the publication of a plan for dealing with the different aspects of the problem. The motion was passed without a division, although the Minister, Mr Penning, indicated that there was no need for a new committee given that ministers from different departments were already working together on this issue. We recommend that the Government provide us with a written response to the House's resolution setting out how it will be implemented.

30.  The spiralling cost of motor insurance has resulted from market dysfunction. Insurers, solicitors, claims management firms and others have focused their attentions on claimants who are not at fault for the accidents in which they were involved, ensuring that they can easily, and without cost to themselves, claim for personal injury, car hire, and other legal costs. This has driven up premiums, particularly as the difficulty of defending claims for whiplash has been exploited to the full. Although we strongly support access to justice, insurers and solicitors have lost sight of the interests of their customers as a whole by encouraging claims to be maximised. Collective leadership is required to turn back from some of the sharp practices of recent years: to give up referral fees or commission arrangements, or make them more transparent; to enable customers to make choices about their claims rather than be railroaded into launching legal action or taking hire cars for long periods; and to honour the spirit as well as the letter of data protection law. We look to the insurance industry to start showing this leadership.

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Prepared 12 January 2012