Personal injury claim costs now make up the largest proportion of motor insurance claim costs, with whiplash claims alone accounting for 20% of premium income, according to an ABI report published today.
‘Lifting the bonnet on car insurance – what are the real costs?’ analyses where the premiums paid by the UK’s 23.5 million motorists go, dispels the myths of motor insurance and gives a progress report on what the industry is doing and what needs to be done to drive down the cost of motor insurance.
The report breaks down what motor insurance premiums pay for:
- 29% is paid out on repair costs and replacement vehicles
- 20% on whiplash claims
- 15% on personal injury claims under £500,000
- 9% on personal injury claims over £500,000
- 3% on uninsured drivers
- 2% on theft
- 26% staff and overheads
Nick Starling, the ABI’s Director of General Insurance, said:
“Despite rising costs linked to excessive legal fees, and whiplash, insurers are determined that customers get the best insurance deal. That is why the industry has successfully lobbied government to introduce reforms to streamline the compensation system and drive down inflated legal costs, is urging action to tackle the whiplash epidemic, and has developed
proposals to improve young driver safety, which if implemented will significantly reduce their insurance premiums.”