According to Kushnick, that greed is also evident in the ABI’s attempts to blame “a non-existent compensation culture” in the UK for its efforts to avoid reduced payouts in whiplash cases.
“We are seeing this time and time again – last week, the UK Supreme Court unanimously rejected the challenge from insurers in a landmark whiplash case for motorists in another example of insurers, attempting to avoid or justify reducing payouts by using calls of ‘fraud’ and ‘overcompensation’, he said.
Insurance companies, on the face of it, have few qualms about passing high costs on to customers. Last summer we quizzed Britain’s biggest motor insurer Admiral after it revealed it had increased UK premiums by 21 per cent on average in the first half of 2023, a rise that was three times the size of the seven per cent inflation rate recorded by the UK’s Cost Price Index (CPI). This contrasted with Admiral’s motor insurance premiums in Italy, France and Spain, which were raised by only three to six per cent in the same period – indeed, Admiral’s rises were below the national CPI inflation rate in both Italy and France.
In spite of appearances it was not a case of ‘rip-off Britain’ pricing, we were told.
“UK claims inflation has been much higher than CPI, impacted by a variety of things including the number of second-hand cars available, which increases claims payouts and the cost of providing a customer with a courtesy car; and the increase in labour costs, which has been exacerbated by a shortage of skilled labour,” said Admiral’s head of group external communications Addy Frederick, who also told us that Brexit was implicated as a factor in the skills shortage.
“During lockdown, premiums fell as fewer people were driving due to lockdown restrictions so premiums are rising from a lower base. Having said that, we are actively engaged in managing our costs so we can deliver competitively priced premiums, especially since in the UK many customers buy their policies using a price comparison website,” she said.
However, Admiral also stated in its half-yearly report that it was focused on protecting margins, and had itself ‘increased prices ahead of the market, with market prices now increasing more strongly’ as a result.
Rising insurance prices, and the associated hardship for many drivers, have led to an increasing number of calls for a Financial Conduct Authority investigation. The FCA has so-far ruled out the full market inquiry that many would like to see, but says it does intend to make a new assessment of the market this year.
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