3 Conclusion |
37. In 2010, when we first started to look at the
factors explaining the rising cost of motor insurance, there was
little political interest in the issue. Our inquiry put the issue
on the political agenda. Since then, there have been debates in
Parliament, a prime ministerial summit, legislative changes, industry
working groups, and reports from the Office of Fair Trading and
the Competition Commission. Our recommendations have been taken
seriously by Government. Many have been taken up for further consideration
or implementation or, where the Government has not agreed with
us, we have received a full explanation of the alternative view.
Our recommendation that the Government should not at this change
the threshold below which whiplash claims are dealt with using
the small claims court procedure was particularly influential.
We have also provided a forum for insurers and solicitors, so
often at loggerheads in the debate on the cost of motor insurance,
to debate the issues. This, as one of our witnesses noted, has
opened up the debate.
All in all, our work in this area has demonstrated the value of
good scrutiny by a select committee.
38. Our work has lifted the lid on a highly dysfunctional
market in which the pursuit of profit by the different firms involved
has led to higher prices for consumers and, in some cases, business
practices which are not in the consumer interest. Furthermore,
the business models of firms in this area have, inadvertently,
encouraged criminal activity. There is no clearer example of this
than insurance firms' willingness to pay compensation for whiplash
claims which they suspect are fraudulent without requiring the
claimant to undergo a medical examination.
39. The Government has shown its commitment to tackling
these problems. However, many of the measures discussed in this
report are still being designed. Other action is also required-such
as implementation of the Competition and Market Authority's recommendations
to improve the information available to consumers about the products
they buy from motor insurers, to control the costs of car hire
for an insured driver not at fault for an accident, and to regulate
price comparison websites.
The work of the City of London Police Insurance Fraud Department
is also important, particularly in relation to deliberate 'crash
for cash' scams, and there is far more the Government could do
to improve young driver safety.
40. There is scope for greater co-ordination between
Government departments to tackle these inter-related questions:
and work on these issues must carry on after the 2015 election.
The Government must continue to engage with all interested parties,
rather than just with the insurance industry, as has been the
case in the past. It must all make sure that its reforms lead
to a sustainable reduction in motor insurance premiums, which
must not be allowed to bounce back to the extraordinarily high
levels of the turn of the decade. If momentum is lost, the problems
we have identified and attempted to solve will re-emerge, to the
detriment of motorists who end up paying the bill.
53 Your Legal Friend (CMI0008) paragraph 9. Back