Steep rise in bodily injury motor claims

by Gill Montia

Story link: Steep rise in bodily injury motor claims

The Fourth UK Bodily Injury Awards Study calculates that the total cost of bodily injury claims paid by UK motor insurers has significantly outstripped inflation over the past decade.

The new report, which is compiled by the International Underwriting Association (IUA) and Association of British Insurers (ABI) has found that bodily injury costs rose by 9.5% a year between 1996 and 2006, more than double the growth in average earnings.

However, government statistics for the period show the number of people killed or injured on British roads falling by 19% and much of the additional cost is generated by large claims.

During the 10 years to 2006, cases costing less than £80,000 recorded inflation of 6% a year but the figure stands at 10% for claims of over £80,000.

In addition, costs per insurance policy for claims of more than £5 million have been increasing by around 30% per annum over the last five years.

Very large claims are continuing to emerge, with insurers currently handling three cases greater than £15 million and one uninsured driving claim estimated at £20 million.

Various legislative and legal changes are responsible for the levels of increase, together with longer life expectancy and growth in the awards made to fund care regimes.

Motor insurers routinely reimburse the NHS for medical treatment and these costs have also risen faster than average inflation.

Dave Matcham, Chief Executive of the IUA has warned that whilst the increasing cost of motor bodily injury claims shows little sign of abating, it is a trend that is ultimately “unsustainable.”

Stephen Haddrill, Director General of the ABI, is calling for urgent reform of personal injury compensation. He particularly wants to see legal costs reduced, as these now account for 10% of every motor premium.