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A document headed "Insurance", with a person pointing a pen at the dotted line, indicating where to sign; our No Win No Fee injury compensation solicitors discussing rising insurance costs.
In the evolving landscape of personal injury law in the UK, the Civil Liability Act has been a pivotal development. This blog delves into the implications of this Act and the paradox of increasing car insurance premiums, offering insights for those affected by traffic accidents. MG Legal, your serious injury traffic accident solicitors, stands ready to assist in navigating these changes. 
Insurance premiums for the average motorist increased by 11 percent in 2017- this despite the Association of British Insurers promising to pass on cuts to motorists if the Government would assist and bring in measures to stop people suffering whiplash injuries from claiming compensation. Despite the ABI advising that 2,400 fraudulent claims a week had been prevented, this apparently making a saving of 25 million pounds per week, accident compensation solicitors costs have been cut, with some of those injured arguing that there are less accident injury solicitors to turn to, with many of the law firms in Preston losing potential clients as a result. 

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Understanding the Civil Liability Act 

To combat the rise of traffic accident- related personal injury claims, the government introduced the Civil Liability Act 2018. 
The Civil Liability Act, implemented as a response to the rising number of whiplash claims and their impact on the insurance industry, aimed to streamline the claims process and reduce fraudulent claims. However, data from suggests a complex outcome. 

Key Features of the Civil Liability Act 

The Act introduced a fixed tariff for whiplash injuries and set a higher bar for claims. This was intended to reduce legal costs and the number of minor, what the government believed to be, often exaggerated claims. 

The Impact on personal injury Claimants 

While these reforms streamlined some aspects of the claims process, they also made it more challenging for genuine claimants to receive fair compensation, particularly for less severe injuries, sustained in a road traffic accident. 

Rising Car Insurance Premiums Despite the ‘Whiplash Reforms' 

Despite the intentions behind the Civil Liability Act, car insurance premiums have continued to rise. This increase can be attributed to several factors, including the overall cost of claims, repair costs, and changes in the discount rate used to calculate compensation for serious injuries. 
Car insurance premiums in the UK have seen a significant increase over the past few years. For instance, in the third quarter of 2023, the average premium for a private, fully comprehensive motor insurance policy was £561, marking a 29% increase compared to the same period in the previous year. This was recorded as the highest figure ever by the Association of British Insurers.  
Moreover, in August 2023, the average car insurance premium had risen by 61% year-on-year, which was the biggest annual increase in premiums since Consumer Intelligence began tracking quotes a decade ago. Since 2013, premiums in the UK have risen nearly 103%, more than doubling in a decade. These increases can be attributed to various factors including inflation, rising repair costs, and changes in regulation. The so-called loyalty penalty, which was banned at the start of 2022, prohibited insurers from charging more to existing customers than to new ones. This change, along with the increasing costs of car repairs and parts and the cost of personal injury claims, has contributed to the rising cost of insurance. This significant rise in car insurance premiums, despite various reforms and legislative changes like the Civil Liability Act, can be a concern for many. 

The Paradox Explained 

The expectation was that reforms would lead to lower insurance premiums. However, the reality has been different, with insurers citing various other operational costs influencing premium rates. The Government estimated that the measures introduced under the Whiplash Reform Programme would remove £1.2 billion from the cost of providing motor insurance, with the insurance industry passing on any savings to motorists (estimated at £35 per motor insurance policy). 

The cost of motor insurance 

The Government had estimated that the savings made by insurance companies under the whiplash reforms, would lead to a reduction in motor insurance premiums by approximately £35 per policy. However, the majority of the evidence submissions we received noted that motor insurance premiums have continued to rise. This is despite there having been a reduction in the number of minor personal injury claims being submitted since the implementation of the reform programme. 
In their written evidence, MASS have said “there is no evidence that the savings from the reforms are being passed to motorists and the reality is that few have ever believed that consumers will see any of the £1.1 billion of anticipated savings”. Elsewhere, The Association of Personal Injury Lawyers, APIL, told us that the price of motor vehicle insurance had gone up by 28% since the reforms were introduced, despite there being a 20% reduction in the number of motor injury claims registered with the Government’s Compensation Recovery Unit (CRU) in 2021. The Association said: “Insurance companies have enjoyed healthy financial savings at the expense of injured people and the wider British public who pay for car insurance”. 

How can insurance costs saved by the Whiplash reforms, finally be passed on? 

According to a recent review of the insurance industry, the only way cuts can possibly be made by insurers (and passed on to motorists) is if more insurers are introduced into the insurance market. There are no more than nine insurers insuring and underwriting vehicles in the UK, many trading through 2 or more of the names you see on any comparison website. For more detailed information, you can visit The Independent's articles. 

Solicitors that deal in serious road traffic accident claims 

MG Legal, as serious injury traffic accident solicitors, provides expert legal assistance in navigating these complex scenarios. Our no win no fee expertise can be invaluable for those affected by traffic accidents, especially in an environment of rising insurance costs and changing legal landscapes. 
This article was published on 7 November 2018, and updated on 30 December 2023. 
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