Aviva’s Road to Reform: Time to tackle the UK’s compensation culture
We believe that everyone is entitled to fairly priced insurance to protect what is important to them. We are here to help our customers when they need it, and pay genuine claims quickly.
However, the UK motor insurance market is a system of spiralling costs which prioritises compensation and encourages exaggerated and opportunistic personal injury claims, such as whiplash.
Whiplash claims cost motorists £2.5bn a year, adding £93 to the average motor insurance premium. 80% of motor injury claims received by Aviva in 2014 included whiplash, a significantly higher figure than many other European countries – in France, just 3% of personal injury claims are for whiplash.
We have to ask ourselves, why does this problem exist in the UK and why are we in a worse position than other EU countries?
Third parties, such as some claims management companies and personal injury lawyers, see huge financial incentives in the motor claims system as an opportunity to profit at the customer’s expense. These companies plague motorists with texts and calls, encouraging them to make an injury claim regardless of their circumstances, and abusing the system for their own financial gain.
We believe the UK must urgently establish a new fair and effective compensation system for both the injured parties and all drivers. Since 2013, we have proposed a three-point plan to cut motor premiums by £50, fight fraud and strike a blow to the UK’s infamous ‘compensation culture’ – in turn pulling the plug on nuisance calls and texts.
Our plan is simple: treat minor, short-term injuries with rehabilitation instead of cash awards; raise the threshold at which lawyers – who add cost to motor claims – are involved, and ban all referral fees. Introduced together they would remove £1.4bn of unnecessary cost from the motor insurance market or £50 from each premium.
Rehabilitation – care, not cash - means those with genuine injuries receive the support they need to recover. Insurers would provide necessary treatment to the injured party after the accident, regardless of who is at fault. This model ensures access to justice is preserved and replaces the financial incentives which are driving fraud and nuisance calls and texts, with a lower cost system which will reduce premiums for all of us. Those with more serious injuries will continue to have a right to retain legal advice and receive appropriate compensation.
Our plans show it is possible to cut the cost of motor insurance while ensuring the genuinely injured party gets the care and compensation they deserve. They also address the text pests that phish for even the most spurious claim by reducing the financial incentives.
When surveyed by Aviva, 64% of consumers agreed this would be a better means of compensating minor whiplash injuries than cash and 95% would like claims management companies to face tougher regulation over how they market their services.
With motor insurance premiums again rising fast – 6% in the last year according to the ABI – we cannot afford to waste more time overhauling the system to put motorists’ interests first.