UK Car Insurance Premiums Soar Due To Escalating Accident Claim Culture
UK drivers looking to renew their car insurance policies are facing huge increases in their premiums following a price hike in the last few months. Figures suggest that prices have risen by up to 40% with the average car costing in the region of £1,000 to insure. Young drivers that have just gained their licence face the biggest bills, with average premiums coming in at around £3,500 per year. Considering the fact that petrol prices are expected to hit £1.50 per litre by Christmas, being a driver in the UK has never been more expensive. So what is driving insurance prices so high? The answer is that the ever-escalating accident claim culture must bear a large portion of the blame.
There has been a huge rise in the number of people looking to bring an accident claim following the introduction of the 1999 Access To Justice Act; which allows the recovery of success fees from defendants. As a result of the Act we have seen many ‘ambulance-chasing’ law firms pay a referral fee for details of possible personal injury claimants. The worrying side of this kind of arrangement is that the law firms can now often receive more than the individual they are representing; with figures suggesting that they receive on average 142% of the amount awarded to the claimant.
Increase in fraud
Another worrying factor that also seems to be driving the prices of car insurance up is that more people are prepared to make a fraudulent accident claim than in the past. In some instances this can involve staging or instigating car accidents with the aim of ensuring an accident claim payout. However, the most common fraudulent accident claim actually involves victims who stretch the truth a little following a genuine incident. A recent survey reveals that one in ten people would happily exaggerate or even invent an injury with the aim of receiving a higher compensation payout.
A change to the law
Insurers have been applying pressure for some time for there to be a review of the current system in place and it appears that their cries may now be answered. Justice Secretary Kenneth Clarke has recently proposed that claimants using no-win no-fee solicitors should not be able to reclaim their legal costs from the defendant. Instead the claimant would be expected to pay their solicitors success fee themselves from the compensation that they have been awarded. It is believed that this could deter many motorists from going down the route of bringing an accident claim and thus greatly reduce insurance premiums. There is also a suggestion that the Government may introduce laws which limit the ways in which solicitors can advertise for business as well as capping referral fees, or possibly scrapping them altogether.
One thing is for certain; if the average UK citizen is going to be able to afford to run a car then there are going to have to be some changes made soon. If not then there is the chance that premiums could increase even further as those of us that continue to drive legally fork out for accidents caused by drivers that decide not to insure their cars due to the cost.
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