Motor Injury Claims Rise Twice As Fast As Inflation

by Richard Kilner

Story link: Motor Injury Claims Rise Twice As Fast As Inflation

The fourth UK Bodily Injury Study (commissioned by the International Underwriting Association and the Association of British Insurers) has revealed that over the last 10 years the number of bodily injury claims from motoring incidents had rapidly accelerated.

Between 1996 and 2006 the cost of claims rose by 9.5% a year, over twice inflation for the same period.

Between 1986 and 2006 the cost of claims has skyrocketed by 840%.

During the last decade the number of claims has also increased, though by the lesser margin of 3% a year.

The increase in both cost of claims and frequency of claims has occurred despite the government statistics showing that injuries and deaths on UK roads has fallen by 19% between 1996 and 2006.

The fastest rate of growth are in the most expensive of claims, with an increase of 10% per year for claims over £80,000 but only 6% per year for claims under this figure. Even higher claims are also on the rise, with three cases currently being considered worth over £15m each, and one uninsured claim over £20m.

Legislative and legal changes over the decade are thought to be one of the root causes of the change in numbers, with insurers often having to pay the NHS for the medical treatment of injuries, and life expectancies are also playing a role.

The above inflation increases could continue courtesy of future possible changes to the law, the increasing cost of medical treatment and more people taking on periodical payments.

The ever increasing cost of motor bodily injuries is not a new phenomenon, according to Dave Matcham of the International Underwriting Association, and has been happening for decades though will become unsustainable sooner or later.

Stephen Haddrill of Association of British Insurers believes that the report’s findings highlight the need for reformation of insurance for personal injury claims, in particular reducing legal costs which now comprise a tenth of every motor insurance premium.

The report has also found that for every £1 of compensation a lawyer receives 43p, the speed of processing claims over £100,000 has improved (benefiting both claimant and company) and uninsured drivers cost half a billion pounds a year, adding roughly £30 per policyholder.