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Insurance reform is overdue but lawyers warn of dangers ahead
publication date: Oct 12, 2011
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author/source: Robin Roberts
Reforms to no-win, no-fee arrangements are unlikely
to reduce premiums for consumers, said the Law Society.
| The Society was responding to a Transport Select
Committee evidence session on the cost of motor insurance.
Insurance premiums continue to rise by many times
the rate of inflation, despite previous assurances of the insurance industry
that any savings in legal costs would be passed on to policy holders.
The reforms, currently being pushed through
Parliament by Conservative Justice Minister Jonathan Djanogly, are set to make
"no win, no fee" conditional fee arrangements much more difficult for
ordinary people to use. This will effectively remove access to justice for
millions of middle income, middle England families who are victims of
accidents, fraud, negligence, injustice and other wrong doing.
According to the Association of British Insurers
(ABI), in 2010 insurers received £46.4 billion in premiums but only paid out
£30.8billion in claims, with considerable additional income from investing its
customers' premiums.
The Society believes the insurance industry has
created a compensation culture smokescreen to hide the real issue- insurers
putting the interests of shareholders ahead of those of consumers.
Law Society chief executive Desmond Hudson said, "The
reforms to civil litigation costs and funding which the Government is proposing
to introduce will further increase the profits of insurance companies to the
detriment of consumers. There will be rejoicing in the boardrooms of insurance
companies."
| | Young drivers are being priced off the road | |
Almost all young drivers feel they are being priced off the road by the cost of motor insurance, according to a survey.
As many as 21% of these young motorists have considered driving without
insurance, revealed the poll by the Young Marmalade insurance company in
conjunction with the House of Commons Transport Committee.
The committee's chairman, Louise Ellman, said she was "extremely concerned" at the poll results.
She added that she would be putting the results of the survey to
ministers when they appear before the committee later today to give
evidence in an inquiry into the cost of motor insurance.
IAM chief executive Simon Best said: "The challenge for the insurance
industry is how to balance the need for driving experience with the very
real risk that young drivers pose to themselves and other road users.
Insurance premiums are matching university tuition fees.
"Many young people need a car to get to work. There are serious
implications to the economy if they can't afford to drive, and to road
safety if they simply choose to forgo insurance."
| "The Government has not only bowed to pressure
from insurers and but it has also fallen for the propaganda about the so called
"compensation culture". This is something for which no credible
evidence exists."
The Law Society calls on the Government to suspend
its plans and work more closely with the legal profession in order to achieve
fairer, less costly and more effective civil litigation procedures which
preserve access to justice for consumers, reduce the cost to businesses and
protect the more vulnerable members of society. | | | |
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