Limited payments for whiplash claims announced

The Prisons and Courts Bill has been published today and it contains new fixed tariffs for personal injury claims.

The government had originally planned to increase the payment limit to £5,000 across the board.  However, the bill sees a change to this plan with a small claims limit of £5,000 for whiplash injury, but a lower threshold of £2,000 for other personal injury claims.  The bill also includes a ban on settlement of such claims without medical evidence.

This bill follows a government consultation which ended on 6 January.  Justice Secretary Elizabeth Truss announced the legislation and said that the measures introduced will cut car insurance premiums by around £40 per year.  The government is “helping to crack down on the compensation culture epidemic”.

Lawyers will be excluded from low value claims and successful claimants up to the thresholds announced will not be able to recoup legal expenses.

James Dalton, ABI director of general insurance policy, said “The reforms to whiplash claims set out in the bill cannot come soon enough, for far too long claimant lawyers have been defending a system riddled with exaggerated and fraudulent claims because they have been profiting handsomely from it.  The gravy train must stop”.  He continued “People want an insurance claims system that provides compensation and support to those who genuinely need it.  What they don’t want is to be plagued by spam calls and texts from ambulance chasers, whilst personal injury lawyers continue to profit from a broken system in urgent need or reform”.

The lobby group Access to Justice criticised the bill.  They believe that the small claims limit “discriminates against ordinary people suffering whiplash injuries and will open the doors for claims management companies and cold callers to wreak further havoc on our market”

Insurtech: via technology partnership or mergers and acquisitions?

Insurtech dominated media headlines in 2016 and became a recurring theme in research reports. This year we can expect more of the same as digital technology continues to reshape traditional practices and attract startups and challenger brands.

According to survey results released in January by Willis Towers Watson and Mergermarket*, insurers believe the immediate priority is to digitise their businesses as quickly as possible. Almost three-quarters (74 per cent) say they lag well behind fintech leaders and must catch up.  

Fergal O'Shea, EMEA life insurance M&A leader at Willis Towers Watson, said: "Insurers recognise the importance of building a sustainable digital infrastructure to improve customer engagement and as an essential distribution channel, which is likely to be addressed through internally driven innovation, joint ventures and M&A activity. For those that hesitate, there remains the commercial risk that they will get left behind and fail to capture future generations and younger policyholders who are more likely to engage via digital distribution.”

Almost half the survey respondents (49 per cent) expected to make an acquisition to acquire digital technologies in the next three years, and nearly all respondents (94 per cent) thought distribution is where digital technologies will make the greatest impact in the next five years.

More than three quarters (77 per cent) said web and mobile will be a key focus for the next two years, with big data, automation, robo-advice and sensors also identified as being significant in the next five years. Insurers also recognised the huge role that digital technology can play in increasing operational efficiency and enhancing customer experience.

Analytics is another growth area highlighted by the survey. Nine out of 10 respondents said they have investigated ways to gather more information from their customers and 79 per cent use social network data.

Even though technology startups can now steal market share, the survey revealed that insurers believe they will prevent this by adopting new technologies themselves and by adapting to a changing marketplace. Just 8 per cent saw new entrants from the technology sector as a major threat to their business. 

If insurers are to bridge the technology gap, they need to work closely with specialists such as RDT. A technology partnership is another way of describing the joint ventures mentioned by Fergal O’Shea, and it can be a quicker and more effective route than mergers and acquisition or internal innovation.

As a technology partner and industry expert, RDT enables insurers to implement digital products and services across all parts of the insurance chain. Distribution, underwriting, claims and settlement are supported by versatile cloud-based technologies that create a powerful new platform.

In this sense, joining forces with RDT is a soft merger – a blend of two insurance businesses and the creation of a new infrastructure, but without the administrative or operational hurdles associated with a conventional merger or acquisition.

* Willis Towers Watson and Mergermarket surveyed 200 senior-level insurance executives in 2016. The aim was to map the changing attitude of insurers to digital technologies and to examine the extent to which companies are using M&A strategies to realise their ambitions.

Insurance professionals among most accident prone groups

Aggregator site GoCompare has released its study into which professions are most likely to make a claim on their car insurance policies. The results aren’t too good for those of us who work in the insurance industry!

Three insurance sector professions made it to the top 20 with claim rates well above the national average of six per cent. In the top ten were insurance consultants, with 10.18 per cent of them claiming in the past five years. Then came insurance representatives, with 9.42 per cent making claims, followed by (even more ironically) claims adjustors at 9.39 per cent.

However the study revealed that it’s health care professionals who are, by some margin, the biggest claimants. GPs came in top, with nearly 13 per cent of them lodging at-fault claims in the past five years. Hospital consultants were a close second with 12 per cent, while hospital doctors and surgeons were in fourth and fifth place, with just over 10.4 per cent of them making claims.

Meanwhile the least likely to claim on their car insurance were car dealers, abattoir workers and car wash attendants.

Government framework for insurance for driverless cars expected this week

The government is expected to set out a framework for insurance for driverless cars this week.

The move has been welcomed by insurers as the framework will enable them to design and tailor appropriate products.  In addition, they were keen to have a single insurance policy as opposed to separate policies to cover the driver and the technology.

The Department for Transport has said that it recommends a 2-in-1 single insurance policy which would cover a motorist when they are driving as well as a vehicle when it is in autonomous mode.

Chris Grayling, the Transport Secretary, said “Automated vehicles have the potential to transform our roads in the future and make them even safer and easier to use, as well as promising new mobility for those who cannot drive”.  He continued “We must ensure the public is protected in the event of an incident and this week we are introducing the framework to allow insurance for these new technologies”.

According to a report by The Telegraph, the government wants to obligate driverless car owners to have two-in-one cover in the hopes of avoiding confusion over insurance claims.  The proposed DfT rules mean full control and responsibility will be handed over from the motorist to the autonomous car as soon as it goes into driverless mode.

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Record High Motor Insurance Premiums

SOURCE: ABI

Insurance premiums have reached their highest recorded level, according to the ABI. The insurance body says the increase has been caused by the combined effect of a rise in repair costs, increases in Insurance Premium Tax and a continued rise in whiplash-style claims.

Premiums rose by more than five times the rate of inflation in 2016, with the average premium now costing £462. Further rises could come if the Ministry of Justice goes ahead with plans to reduce the discount rate for insurance payouts.

One reason for the increase in premiums is a rise in the cost of repairs because of cars’ increasingly sophisticated electronics. Another is that buying spare parts is getting more expensive because of the weakness of the pound. The average repair bill has risen by 32 per cent in the past three years, the ABI said.

Rob Cummings, the ABI’s assistant director and head of motor and liability, said: “These continue to be tough times for honest motorists. They are bearing the brunt of a cocktail of rising costs associated with increasing whiplash-style claims, rising repair bills and a higher rate of Insurance Premium Tax.

"The sudden decision to review the discount rate has the potential to turn a drama into a crisis, with a significant cut throwing fuel on the fire in terms of premiums.”

Fun night out bowling

RDT’s 2017 social calendar kicked off last night with a visit to our local ten pin bowling alley.  Twenty-two staff members from the Kings Hill office spent the evening engaged in intense competition, with Will O’Shea coming out on top with the highest score of 189.

The evening was thoroughly enjoyed by all and was organised by our new Administration Services Manager, Maggie Chapman.  You’ll be able to learn more about Maggie in our Employee Spotlight later in the month.

Digital distribution and the rise of the ‘Nomad’

Accenture has highlighted the rise of a distinct group of insurance customers whose focus is resolutely digital and mobile.

In a report released this month titled The Voice of the Customer: Identifying Disruptive Opportunities in Insurance Distribution, the consultancy firm identify a growing number of people – particularly so-called millennials – who want to purchase insurance in the same way they buy consumer products.

Accenture surveyed more than 30,000 people and divided them into groups according to digital experiences and preferences. The term ‘Nomad’ was used for the most digitally active group, who wanted speedy access to insurance through smartphones and other mobile technology.

Nomads are drawn to pay-per-use insurance, especially for cars, and want the convenience and immediacy of buying online. As Accenture points out, the future of distribution will increasingly be shaped by this group. The report states: “To remain relevant and become an everyday insurer, carriers need to change their business model from one that is product- and process-driven to one in which the customer is central, data and analytics drive most decisions and experiences, and the key enablers are advanced technologies”.

RDT builds the technologies that are redefining user experience and giving providers greater focus and accuracy. We’ve done it with Equator, which centralises rates and enriches data, and now we've created technology that directly addresses the needs of Nomads. A good example is Trice, RDT’s groundbreaking app, developed for Trice Insurance and unveiled at the InsurTech Rising conference last November.