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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