ABI: Average Car Insurance Claim at Record High


March 2018

ABI: Average Car Insurance Claim at Record High

Data released by the Association of British Insurers show that the typical price of insurance claims for motor vehicles has hit its highest point ever.

The figures show that £8.1bn was paid out for all motor claims in 2017 which is a similar amount for 2016. The average amount claimed rose to £2,936, which is the highest on record, and the increase is thought to be largely driven by an increase in the amount paid out on claims relating to both theft and vehicle repair.

Typical personal injury claims in Q4 of 2017 were at their highest average value since Q2 in 2016 with the average settlement sitting at £10,816. The volume of personal injury claims fell over the year, however, 320,000 being settled. The number of personal injury claims being put forward following roadside accidents is currently 50% higher than it was 10 years ago, despite the fact that there are fewer reported accidents now and that England has one of highest levels of road safety in Europe, according to justice secretary David Gauke.

This is believed to be partly due to a rising number of whiplash related claims being reported to the Compensation Recovery Unit.

Rob Cummings, ABI’s Assistant Director, commented saying: “Despite motor insurance remaining a highly competitive market, cost pressures saw the average price paid for motor insurance jump by 9% to a record high in 2017. Putting a lid on excessive costs, which end up being paid for by motorists, remains a priority for insurers. This makes it all the more important for the Government to play its part, by pushing ahead with its reforms to personal injury compensation without further delay.”

The government recently announced regulations aimed at clamping down on fraudulent whiplash claims. Currently, the cost of such claims faced by the car insurance industry sits at £1bn per year. The plans, outlined by Mr Gauke will alter the means by which claims for whiplash are measured and paid with the move expecting to save drivers £35 a year. The sharp increase in pay-outs for whiplash is thought to be predominantly down to a “predatory” injury claims market which promotes exaggerated injury reports. This in turn has increased the premium for motorists as a whole.

David Gauke said: “We are putting this right through this important legislation, ensuring whiplash claims are no longer an easy payday. The bill will seek to set fixed amounts of compensation for whiplash claims and the halt the practice of settling whiplash claims without medical evidence.”

The legislation has been a long time in the making, it was incepted in November 2016 after the Ministry of Justice spoke of the need for widespread changes to the sector. Back then it was proposed that either minor whiplash claims should be abolished altogether or there should be a limit to the amount that could be paid out.