Confused.com calls on government for collaborative approach as it tackles increasing car insurance premiums.
Confused.com has urged the government to work with insurance providers, regulatory bodies and associations including the DVLA in an effort to halt the steep rises in car insurance premiums. Giving evidence to the Transport Committee Inquiry into the cost of motor insurance, Will Thomas, head of motor at Confused.com, told the committee it was essential the reasons for the prices were tackled with a collaborative approach. The most recent Confused.com Price index revealed premiums have risen 37% since this time last year. Factors such as increasing costs of claims, more injury payouts and increasing fraud have created a situation where many providers are operating at a loss and insurance providers have reacted strongly to move towards a profitable model. As part of its evidence, the price comparison site proposed a series of steps which it believes could help stabilise the cost of motor insurance prices going forward: • Higher deterrents for uninsured drivers: The punishment for this does not fit the crime. The penalty for driving without insurance carries a maximum fine of £1,000, more commonly those caught are given a fixed penalty of £200. Where the cost of the penalty remains significantly cheaper than the cost of a policy, the incentive to gamble is much greater. • More education and support for young drivers: Making driving tests harder and more relevant to current driving could decrease claims, allowing the price of policies to fall. There should be increased emphasis on the consequences of dangerous driving to this age group. With 15% of these drivers causing 31% of all accidents and 40% of all claims cost, schemes to educate them and provide them with better experience can only be positive and may have the knock-on effect of reducing fatalities and injuries amongst the young. • Review of the Pass Plus scheme: The pass plus scheme has started to become less of a desired qualification with some insurers as they don’t see the benefit in lowered risk. It is time to re-assess this scheme and improve to make it an attractive option for drivers and insurers alike. • Improved data sharing: Improved communication between insurers and groups such as the DVLA to reduce instances of fraud and to create an industry solution to the new model by which motor insurance is purchased. • Implementation of suggestions in the Lord Jackson review with regard to reforming the structure of compensation claims to limit the cost for legal fees incurred by insurance providers. Confused.com also laid out what it believes will be the consequences if insurance premiums continue to rise • More uninsured drivers. MIB estimate that there are currently 3.6 million uninsured cars in the UK at present. The risk is that people will be priced out of the market when it comes to insurance and gamble with cover. • More underinsurance – High premiums will force drivers to reduce cover. They will likely either reduce their insurance cover to Third party only policies or alternatively reduce the amount of ancillary insurance products they have with their motor insurance (e.g. legal cover, courtesy cars and breakdown cover) in an attempt to mitigate prices rises and save money. • More fraud - via cash-for-crash large scale undertakings and in smaller ways (like non-disclosures to get a better price), are likely. Inflated claims will put more pressure on insurance providers’ profit margins and will also lead to more people having policies cancelled for deception in the event they are caught, leading to a further increase in uninsured drivers. Will Thomas, head of motor at Confused.com says “This enquiry is not before time, with our index showing prices have risen by 37.5% in the last 12 months, with premiums now standing at £650 on average. 17 – 20 year olds have seen prices rise by a massive £616 over the last 12 months. Uninsured driving is one of the biggest consequences of the price hike. Price comparison goes some way to keeping the costs down by providing a clear and transparent market place but this alone can’t solve the problem. If insurance providers continue raising their prices then consumers will need an alternative solution or they may be tempted to go without. The consequences of gambling with cover are not worth it. Those struggling to pay for insurance will be unable to afford to repair their vehicle or any involving vehicle in the event of an accident, putting more pressure on companies like the MIB, and, as a result, more pressure on struggling insurance companies” -ENDS- For further information please contact: Press Office Confused.com 02920 434 398 firstname.lastname@example.org Graham Whitehead EMB 01372 751060 / 07827 953969 Graham.email@example.com http://www.emb.com Notes to editors Full submission available on request. Confused.com/EMB price index Q3 and accompanying insight also available. About Confused.com: Confused.com is one of the UK’s biggest and most popular price comparison services. Launched in 2002, it generates over two million quotes per month. It has expanded its range of comparison products over the last couple of years to include home insurance, travel insurance, pet insurance, van insurance, motorbike insurance, breakdown cover and energy, as well as financial services products including credit cards, loans, mortgages and life insurance. Confused.com has a panel of 90 motor insurance providers and could save customers over £154* on their annual car insurance policy. Confused.com is not a supplier, insurance company or broker. It provides a free, objective and unbiased comparison service. By using cutting-edge technology, it has developed a series of intelligent web-based solutions that evaluate a number of risk factors to help customers with their decision-making, subsequently finding them great deals on a wide-range of insurance products, financial services, utilities and more. Confused.com’s service is based on the most up-to-date information provided by UK suppliers and industry regulators. Confused.com is owned by the Admiral Group plc. Admiral listed on the London Stock Exchange in September 2004. Confused.com is regulated by the FSA. * 17% of customers who received a car insurance quote in 2009 and provided a best alternative price saved over £154.25