Whiplash reforms could see motor premiums fall
Fraudulent injury claims are estimated to cost British drivers £2bn per year, an average of £90 per motor insurance policy, according to government figures.
In his Autumn Statement, the Chancellor said that compensation for injury would no longer be in cash but in medical care, while more small claims will be able to go to the small claims court with an increase in the upper limit from £1,000 to £5,000.
By introducing these changes, the government hopes to remove over £1bn from the cost of providing motor insurance.
“We expect the industry to pass on this saving, so motorists see an average saving of £40-50 per year off their insurance bills,” George Osborne said.
However, he said it would be “interesting” to see whether the savings would really be passed on to motorists.
“Even if you apply the mean of these untested savings, the average premium, from comparethemarket.com data, would still stand at around £473, and we predict premiums may rise further due to hardening marketing conditions.”
He warned that those who automatically renew their car insurance can be ‘particularly badly hit’ by annual premium inflation, adding that customers could currently be paying on average almost £100 extra per policy than those who switch.
“Smart motorists will be shopping around regardless of this announcement.”