In March, the Government published its Civil Liability Bill, which set out plans to alter the compensation payments due to those with whiplash injuries. The Government are indicating that this should amount to an average saving of around £35 on a yearly insurance premium.
Compensation for whiplash injuries that arise from car accidents has long been a controversial topic, and as we know, consumers tend to be very sceptical when it comes to insurance companies passing on savings.
With that in mind, we conducted a survey for Consumer Intelligence on Viewsbank, to assess consumer attitudes to the proposed changes, and the results weren’t surprising at all. In fact, we have asked similar questions before, back in November 2016 when the Ministry of Justice offered up plans to save motorists in the region of £40 per year on their insurance by reducing the number of whiplash claims. Motorists were sceptical back then too, with around two thirds believing that insurers would simply pocket the difference, and only 15% trusting all insurers to pass on savings to consumers.
This time around, and perhaps as expected, consumer attitudes have changed very little. Perhaps slightly surprisingly however, it would appear that consumers are actually slightly more sceptical of insurance companies than before, as the results indicate that 70% now believe that the majority of (50%) or all (20%) insurers will pocket the difference.
Do you expect insurers to pass on any savings from personal injury reform?
I think all insurers would pocket the difference | 20% |
I think most insurers would pocket the difference | 50% |
I think most insurers would pass the savings on | 22% |
I trust my insurer to do this, but not the wider industry | 8% |
Those who do expect some sort of saving also expect it to be a fairly small one, with 70% of respondents predicting it to be £30 or less. This scepticism contradicts research by Consumer Intelligence showing that although average premiums have increased by 7.5% over the last year, they have fallen by 3.4% since September and are actually on the longest downward trajectory since records began. This just shows how much work is still needed to be put in by insurance companies in order to regain the trust of consumers. In fact, two thirds of consumers asked in the survey actually believe that their insurance premiums will rise in 2018.
Do you expect your premium to rise in 2018?
Yes | 67% |
No | 14% |
It depends on the government | 7% |
I don’t know | 12% |
What is clear from our survey though, is that most consumers don’t know that any of this is happening, however, the desire for whiplash payment reform is increasing.
Stuart Peters, Consumer Intelligence Head of Research explains: “There is a good news story in here for consumers, but they’re just not aware of it – therefore there’s a job for the industry to do.
“We found that almost one in two consumers feel whiplash payments are too high. At the same time, expectations have increased, with 20% of consumers hoping for at least £2,000 – almost twice the figure in 2016.
“These findings demonstrate why insurers have worked so hard on whiplash reform, in an attempt to hold premiums in check, but it seems that the majority of consumers are not receiving the message.”
More Ogden Changes
Consumers may also remember that the Government made some changes last year to the Ogden Rate, which is used to calculate pay-outs for personal injury claims. These changes last year massively increased costs to insurers, and therefore premiums in quite a few cases.
However, the Government has also announced that the Ogden rate will be looked at and altered again, and while the exact figure has yet to be decided, experts are suggesting that consumers could see and average reduction of around £50 on an annual policy, which coupled with the changes from the Civil Liability Bill could see consumers save around £85 or approximately 11% off an average policy.
Despite the above, our study found that only 3% of consumers were aware of this upcoming change, giving the insurance industry a massive opportunity to being generating some positive PR and making consumers aware of this. It’s clearly much needed, given that only 9% of consumers were aware that most of the industry has already pledged to pass on whiplash reform savings, while 21% didn’t believe that such a change would even happen.
Either way, it would appear that the insurance industry now has a golden opportunity to highlight these upcoming changes, something that would certainly help them regain some of that lost trust with consumers.
What do you think? Are you expecting to see a saving on your next car insurance renewal? Let us know in the comments.
