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ACSO comments on ABI 'roadmap to tackling insurance costs'

Posted on Tue, 27/02/2024

Commenting on the ABI's '10-point roadmap to tackling insurance costs', Matthew Maxwell Scott, Executive Director of the Association of Consumer Support Organisations (ACSO), said:

"While there is much in the insurers' plans we welcome, some points raise alarm bells. 'Reducing the impact of the discount rate' can only mean cutting support for critically injured people when the 100 per cent compensation principle must be adhered to if we are to ensure there is no risk of such consumers not getting what they need.

"It also seems premature to be hatching more plans to reduce support for those with more minor injuries by extending the whiplash reforms. We must first await both the Supreme Court's judgment on the Rabot mixed-injury appeal but also see what savings the reforms to date have delivered, something the FCA's report due later this year should reveal.

"Perhaps the best change would be far greater transparency in how insurers price their products. While there can be a range of factors at play, including inflationary pressures, the most significant is how underwriters tend to herd in their pricing decisions, leading to what insurers call 'hard' and 'soft' markets, whereby the harder the market, the higher the prices. This is usually great news for shareholders but bad for hard-pressed motorists.

"It's not uncommon too for insurers to talk of underwriting losses while ignoring the investment returns which ensure healthy profitability overall. In the end it's a question of spin, with investors given one message but policymakers another.

"If insurers are serious about delivering value to customers and tackling the insurance trust deficit, they need to be honest about how the market functions and why this has led to prices sky-rocketing in recent times."

The ABI’s report can be seen here