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Insurance Premiums Fall Thanks To Change In Injury Claim Regulations

By raccars Published

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For the first time in ten years, there has been a drop in the number of third party injury claims, which experts believe could be helping to drive insurance premiums lower. The Institute and Faculty of Actuaries (IFoA), says changes to the law involving third party injury claims in 2013 account for a drop in the average insurance premium, also helped by lower numbers of claims management firms or 'ambulance chasers.'

The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO), was introduced last year and led to referral fees for claims cases being banned. The act also saw third party legal costs cut, which are recoverable in third party injury claims. The IFoA report into the motor insurance industry claims that the number of third party injury claims has dropped by about 10%, as a result of the act, leading to a total drop in claims revenue of 33%, to £238 million, down from £354 million. Per claimant, the reduction averages out at £250, to £4,750 from £5,000 previously. There are also now 35% fewer claims management firms.

The IFoA report did, however, note that it is no coincidence that the regions where the highest number of claims management companies still exist also still posted the highest number of third party injury claims. The frequency of third party injury (TPI) claims is highest in East London, at 2.39%, followed by North West London and Southall in Middlesex, each at 2.31%.

The IFoA claims the insurance industry in the UK has foreseen the impact of the LASPO act and had already reduced the average premium price by 19% by March this year. Further industry changes in the form of forthcoming reforms to the law on whiplash claims are expected to see greater reductions to insurance premium costs.

Recently insurer, Aviva, achieved a landmark victory in a whiplash case, which should see fewer whiplash incidents get as far as court. The court's ruling in this particular situation was that the claimant was 'fundamentally dishonest,' which led to the claim being rejected. The claimant was also then ordered to contribute to legal costs.

New regulations designed to reduce the number of court cases brought about by 'no win, no fee' firms had not been exercised up to this point, and previously losing claimants were protected from liability for expenses. The new rules allow for this protection to be removed if a claim is deemed to be fundamentally dishonest.

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