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Legal changes reduce motor insurance claims

For the first time in ten years Institute and Faculty of Actuaries (IFoA) research shows a reduction in third party injury claims.
  • Reduction in claim frequencies appears to correspond with legal changes enforced in 2013 and a reduction in claims management companies (CMC)
  • Continued links between claim hot-spots and CMC locations
  • Average third party motor insurance premium has reduced by 19%.

The Institute and Faculty of Actuaries (IFoA) 2014 report into third party motor insurance damage and injury claims highlights that 2013 legal changes appear to have had an impact on motor insurance claims.

Previous reports from the IFoA have highlighted discrepancies between reductions in numbers of property damage claims and increases in numbers of personal injury claims, the high volume of small (under £20,000) claims and the strong correlation between hot-spots for claim frequencies and claims management company (CMCs) locations.  These observations, amongst others, suggested to some commentators that a culture of false ‘whiplash’ claims had developed in the UK. 

In its first report capturing the impact of legal changes made in 2013, the IFoA has recorded, for the first time in 10 years, a 10% reduction in third party motor insurance injury claims. There have also been reductions in the cost of injury claims.  

In 2013 the number of CMCs reduced by 35%, and data from the Ministry of Justice’s annual claims management regulation report also shows a reduction in income from Motor Personal Injury claims of 33%, from £354m to £238m.  However, the correlation between CMC locations and claim hot-spots continues, with the highest frequencies seen in London, Liverpool and Manchester. (See table in editorial notes.) 

David Brown, one of the authors of the IFoA report said;

“Legal changes in 2013, most significantly the Legal Aid, Sentencing and Punishment Offenders Acts – known as LASPO – appear to have had a significant impact on motor insurance injury claims. Our data suggests that in 2013 there were reductions in:

  • third party injury claims frequency of 10%
  • the number of claimants per claim from 1.6 to 1.5, representing a 4% reduction
  • and a reduction in the average cost per claimant from £5,000 to £4,750, representing a 5% reduction. 

“However, we remain uncertain as to what the final impact of these changes will be, as well as that of other legal changes, such as the upcoming whiplash reforms. 

“What is clear is that the motor insurance industry anticipated the impact of legal changes and has already passed on the reduction in costs to consumers. In the year to the end of March 2014 there was a 19%* reduction in quoted motor insurance premiums; which is great news for consumers.”

*Source: Watson Car Insurance Index


For further comment, a summary of the updated findings of the report inclusive of charts, a full copy of the report, a jpeg image of David Brown or to answer any questions that you may have please contact Annette Heninger at the IFoA on 07525 592 198 or by emailing

Download the short version of the report here.

Editorial notes:

The best and worst postcode areas in England, Wales and Scotland based on third party motor insurance injury claim frequency* relative to population density:

Worst 10:

Rank Location TPI frequency
1 East London 2.39%
2 North West London 2.31%
3 Southall 2.31%
4 Ilford 2.26%
5 Harrow 2.22%
6 North London 2.20%
7 Liverpool 2.03%
8 Manchester 2.00%
9 Oldham 1.98%
10 South East London 1.91%

Best 10

Rank Location TPI frequency
1 Inverness 0.48%
2 Aberdeen 0.53%
3 Dundee 0.58%
4 Kilmarnock 0.66%
5 Exeter 0.66%
6 Dorchester 0.67%
7 Kirkcaldy 0.67%
8 Falkirk and Stirling 0.68%
9 Taunton 0.70%
10 Truro 0.72%

(NB. *Frequency references the numbers of claims as a percentage of the number of cars, rather than just volume. As such, frequency offers a fair comparison between more and less urban/populated areas).

About the Institute and Faculty of Actuaries

The Institute and Faculty of Actuaries (IFoA) is a royal chartered, not-for-profit, professional body. 

Research undertaken by the IFoA is not commercial.  As a learned society, research helps us to fulfil two of our royal charter requirements; to further actuarial science and serve the public interest.  

Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.

Members of the IFoA have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.

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