Modern Insurance Magazine Issue 62

ASSOCIATIONS ASSEMBLE
Mike Benner
Title: Chief Executive
Association: Association of Personal Injury
Lawyers (APIL)
The Justice Gap
Many people injured in road collisions
are not receiving compensation since the
‘whiplash reforms’, where damages were
slashed and the Official Injury Claim (OIC)
system was introduced.
A clear ‘justice gap’ has been unveiled by APIL’s
dedicated research team, which tracks and analyses
data relating to justice for victims of negligence. Data
is studied from a broad range of sources and addresses
a variety of issues - from criminal injury claims to birth
rates, insurance premiums, traffic concentrations, court
delays, and in this case, access to justice and injury
levels.
The team has unearthed some stark results. Comparing
the landscape today to how it looked pre-pandemic,
the number of people injured in road traffic collisions
has increased by 18%, while the number of people
claiming compensation is down by a quarter. Far more
people are being injured, yet there are fewer claims. The
only explanation lies with the reforms.
The Government believed the insurance industry when
it said that the cost of compensating people for injuries
made premiums high, and that premiums would go
down if the reforms were introduced. However, APIL
analysis shows that insurance premiums are creeping
ever higher – 41% higher than in 2021, in fact, according
to data from the Office of National Statistics. The
situation is wholly unfair, and smacks of poor policy.
Injured victims of negligence were never the problem.
We hope that insurers will be held to account when
the Treasury reports on the benefits of the reforms to
consumers. The damage is already done for the many
road crash victims who will never get the compensation
they need to help get their lives back on track. The law
is there to provide for the needs of injured people. It is
the Government’s job to make sure it does exactly that
in the future.
Anthony Hughes
Title: Chairman & CEO
Association: Credit Hire Organisation (CHO)
Consumer Duty:
Overly Onerous, or
a Necessary Check
on Overzealous
Capitalism?
Preparing for the Consumer Duty has
been a massive exercise for the insurance
industry. One major player sent 14,000
emails and other such material to their
broking partners over a five-month period,
to help them understand what the new
regulations required.
According to the Financial Conduct Authority (FCA),
the new Consumer Duty sets higher and clearer
standards of consumer protection across financial
services, and requires firms to put their customers’
needs first. This is especially important in light of the
cost-of-living crisis and the number of customers
showing vulnerability characteristics. The FCA
estimates that 47% of the adult population exhibits one
or more of these traits.
But how easy is it for insurers to put customers first,
when they have a competing fiduciary duty to their
shareholders? In the last 18 months, car insurance
premiums have rocketed thanks to surging claims
inflation. Customers, even those with a zero claims
history, have been hit by 40%+ price hikes, which
insurers say is needed to fill the hole in their balance
sheets.
We see similar issues across many other regulated
industry sectors. Water companies are under fire
for paying out dividends instead of investing in
infrastructure to stop our rivers filling up with sewage.
Energy companies have been accused of profiteering
from the energy crisis; Centrica reported record profits
of £3.3bn back in February.
To add to the consumer/shareholder paradox, there
are calls, mostly from the political right, for regulatory
burdens to be further relaxed,
especially where issues
such as ESG and EDI are
concerned - both of which
are allegedly stifling
corporate growth.
No one piece of
regulation is perfect, but
if the FCA feels the need
to demand more of big
business, the complex
balance of interests
between consumers and
shareholders may come
to be out of kilter.
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