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New report: motoring personal injury claims continue to rise

An exclusive new report carried out by the Institute and Faculty of Actuaries examining motor insurance data in 2010 has identified a number of potentially concerning trends: Despite a reported fall in car accidents where the driver wasn’t at fault (third party accidents); the rise in personal injury claims caused by third party car accidents continues unabated; This trend seems to be linked to the growth of claims management companies; While the cost of settling 2010 personal injury claims has been no higher than settling 2009 claims, it is unclear how the picture will pan out as more complex claims have yet to be settled.

An exclusive report by the Institute and Faculty of Actuaries’ Third Party Working Party, examining motor insurance data in 2010, has shown that despite a reduction in the total road usage and a continuing reduction in the number of overall accidents per policy, the proportion of accidents resulting in personal injury claims continues to rise.

According to the research, since the third quarter 2007, there has been a 3.3% pa decrease in the number of third party claims per insured vehicle, caused by a decrease in road usage, linked to the rising cost of petrol, and an increase in car safety.  This downward trend was even stronger in 2010 with a 6% drop in accidents.

However, both the proportion of accidents involving personal injury claims and the number of injury claims per policy has continued to rise with almost 25% of accidents now resulting in an injury.

David Brown, chair of the working party and one of the authors of the report, said: “This continuing rise in personal injury claims seems, yet again, to coincide with the growth of claims management companies. Over the period 2010-2011, the number of claims management companies in England and Wales increased by 20%, most notably in known accident and claims ‘hotspots’. And, where there is a notable increase in claims management company activity in an area, there is a corresponding increase in personal injury claims.

“Although last year’s Ministry of Justice reforms means that the settlement process for claims has speeded up and the cost of claims settling to date has been no higher for 2010 accidents than 2009 accidents, it is as yet unclear how this picture will pan out as the more complex claims settle.  But with the Financial Services Authority returns showing that in 2010, private car insurers lost 24p for every pound of premium they charged, it is clear that there is nothing in our research suggesting that premium increases can stop."

A copy of the report can be downloaded here.


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