Aviva top dog, Mark Wilson, has blasted the Competition & Markets Authority (CMA) for synthesising ëvery little meaningful changeí within the motor insurance market.
Key measures undertaken by the competition regulator include the cessation of ëprice partyí agreements between brokers and price comparison sites. But, Mr Wilson, chief executive of consumer favourite, Aviva, believes the CMA has failed to tackle germane issues facing the car insurance market.
Mr Wilson highlights the increasingly brazen fraudulent activity that infuses the motor insurance market at present, whilst stating despite the CMAís 2 year investigation, the market is still characterised by ëmillions of pounds of unnecessary costsí. The investigation in its entirety paid no heed to the principal flaws within the market, according to Mr Wilson, who identifies ëwhiplash claims, fraud and escalating legal costsí as key challenges the CMA failed to authoritatively address.
Mr Wilson slams the claims process in its entirety, stating it breeds unnecessary expenses and exaggerated injury claims by pretenders seeking a quick payday. These hyperbolic claims are borne out of a system which caters to complainants, and as such certain individuals seek to manipulate this system to their monetary benefit. This results in increases in the price of premiums paid by guiltless motorists undeserving of such high costs.
Last week, the Association of British Insurers (ABI) declared they had identified 180, 675 deceptive motorists attempting to illicitly obtain unwarranted compensation in 2013. When broken down, this amounts to 3,475 fraudulent claims made a week. More alarming still, this is the first time records of such activity have been taken, underling just how little government scrutiny has been afforded to such a patent issue. The ABI estimated a total of £2bn worth of fraudulent insurance claims were paid out in 2013.
James Dalton, ABIís Head of Motor Insurance, also lamented the CMAís failure to address the inflated cost of replacement cars to insurers: ìTodayís CMA report is the culmination of three years of work and has cost taxpayers millions of pounds. The fact that it fails to do anything to address the excessive costs of replacement vehicles ñ a problem that the CMA itself identified ñ will be a bitter pill to swallow for honest motorists.î
Aviva are long standing critics of the ethos surrounding compensation claims within the UK, and Mr Wilson has persistently urged policymakers to address the problem of rising false whiplash claims. 94% of personal injury claims made to Aviva were for trifling matters, such as whiplash claims. Mr Wilson juxtaposes this with the 3% of motor injury claims pertaining to whiplash made in France before denouncing motor insurance legislature within the UK as ëweakí.
Avivaís suggested reforms
Whilst motor premiums have decreased in cost by 14% since 2012, and the government has committed to the provision of clearer information regarding the ins and outs of no-claims bonus protection, Wilson suggests much needs to be done to tackle the unaddressed problems within the car insurance market.
Mr Wilson criticised the CMA for overlooking the problem of referral fees in leasing and repair applications, stating these should be eradicated as they add to cost of premiums, yet are of no benefit to the consumer whatsoever. Rather, they exist to boost the profile of third parties, such as care leasing companies, at the expense of motorists everywhere. According to Wilson, the bureaucracy involved in the process leads to firms such as claims management companies and several others profiting from trivial claims, adding roughly £7 to each premium paid.
Moreover, the amount expended by insurers in legal fees amounts to 77p per £1 paid in compensation to complainants. Mr Wilson argues that legal proficiency is not required in the majority of cases which entail trifling injuries, and the exorbitant amount afforded to lawyers is not reflective of their role in the insurance process.
Wilson also stresses the need for intensified regulation, and a greater degree of flexibility for insurers, on frivolous motor claims. Highlighting the growing threat of organised gangs who seek to expose the inherent weaknesses within the motor insurance market, Mr Wilson places the onus on everyone involved in the process to put their heads together and recognise the threat of mass, calculated fraud permeating the car insurance market.
Regarding the swollen number of false whiplash compensatory applications, Mr Wilson suggests moving away from dishing out cash sums to such claimants, and towards the provision of suitable healthcare to these victims. Mr Wilson states that ëwe want to put care, not cash, at the heart of the injury claims process.í He argues that this system would ësave motorists around £32m on the average annual premiumí.
Whilst it cannot be disputed that government has attempted to address the car insurance market, more action seemingly needs to be taken, with a thorough overhaul not unthinkable, especially when Mr Wilsonís remarks are taken into account.
A glut of superfluous costs bulges within the car insurance market, and Avivaís suggested reforms could save consumers £50 on their annual premiums. The issue is even more pressing now than ever, given the CMAís widely perceived meek investigation, and consumers ought to be aware of the equity which they are not being presented with.
Save money by comparing Car Insurance quotes with MoneyExpert and earn £25 cashback if you take out a policy.