Cars are safer than they
have ever been. With crumple zones, impact panels, airbags and
seat belts good car design has helped to make the roads safer
and despite the increasing traffic the number of accidents
involving death or injury is falling steadily. Cars are also
cheaper to buy in real terms, and easier to repair. So, why are
car insurance premiums rising so rapidly?
The insurance companies point to fraud and the compensation
culture as being the main culprits. There is undeniably a lot of
truth in this, but are they insurance companies not partly to
blame for this themselves?
Most car insurance fraud is ridiculously easy to spot. The
favourite one is the popular 'whiplash' claim and nowadays these
are some common that in some postcodes in England it is
virtually impossible to get car insurance at any price because
of the epidemic of sore necks that suddenly appear whenever
there is a minor traffic accident. This type of injury was of
course practically unheard of before some well-publicised and
very lucrative compensation claims and it is difficult to accept
that all of a sudden the necks of people in England have all of
a sudden become far weaker than before. The extent of this
problem can be judged by the fact that around 80% of injury
claims are now put down to whiplash injury; despite all the
safety features and head restraints in a modern car. There is no
escaping the inevitable conclusion that a very high proportion
of these, possibly the majority, are fraudulent.
And yet, in very few cases do the insurance companies
investigate these claims as thoroughly as they should. The
reason? It costs money. And if the case goes to court, it costs
even more money. It is very often far cheaper to pay up, and to
fight but, as the old saying goes, 'he who pays the Dane Geld
will never get rid of the Dane'; in other words the more they
pay out the more people will try it on which means there will be
even more to pay out. Not a problem, it is we who pay it in our
insurance premiums, not them.
The compensation culture is put forward as another major cause
of increasing car insurance premiums, with the finger pointed at
the claims management companies. However, where do they get
their business from?
Would you believe, a huge amount of it comes from the insurers
themselves? When a motorist is involved in an accident for which
someone else can be shown to be at blame that motorist becomes a
hugely valuable commodity. By passing on the names of their
clients who have been involved in no – blame accidents the
insurance companies pocket fees that they receive not only from
claims companies but also solicitors, garages, car hire
companies. How much they receive is a closely guarded secret but
industry insiders have suggested that it is not far short of £5
billion a year!
Officially The Association of British Insurers deplore this
situation. When asked to ban it however they have refused to do
so on the grounds that by accepting these fees the insurance
companies are merely recouping their losses. The mind boggles.
Our insurance companies really so keen to keep insurance
premiums down? Bearing in mind the number of people who take a
call from the premiums that we pay, the more expensive the
premium the higher the profits for everyone. Except the poor car
insurance purchaser, who has no choice in the matter.