Last week two judges ruled that the Government’s decision to cut fixed costs in “low value” road traffic claims from £1200 by more than 50%, to £500. Of course, your definition of “low value” will vary according to whether or not you’re brought up in a world where three halves make one – see Five grand.
The reduction came largely because of insurers’ scuttling away from the referral fee games that they have played on each other for years and falsely claiming that if they all promised not to rip each other off in future then the job of running a claim could still be done profitably. Well, not if it’s done competently – Peanuts.
As the High Court heard last Friday, HMG was persuaded of these fallacies in a closed meeting at Downing Street and emails between ministers and their insurer friends that were not open to any scrutiny or comment from those who represent innocent victims. Lord Justice Elias explained that’s how it’s done and “if people deem it to be unfair that is a matter for the ballot box, not the court”.
Thanks for that – and roll on 2015.
But the good news is of course that our Government agreed this treacherous deal for good reason – to save us all money in these desperate times. They were assured that the massive savings in legal costs and compensation would fund (presumably meaningful) reductions in the cost of insurance for Joe Public.
So, how is it going so far?
Well, the MD of Liverpool Victoria was reported yesterday to have warned consumers not to expect vastly reduced premiums as a result of the new fixed costs. LV’s John O’Rourke said he expected a 3% reduction in premium but said he was “not hopeful there will be much more to come”.
Hmmm. Smacks of a poor bargain, without anything else considered.
If regard is had to the announcement last month that LV’s profits last year were up (are you sitting down?) by 54% you might feel that it stinks.
Meantime, Direct Lying report a modest increase of only 9% to £461million profit whilst AXA UK and Ireland announced a rise of 86%.
An AXA director lectured me last week about what he termed “the lack of profit in motor insurance since 1994”. I asked him the secret to losing money for two decades and staying in business, and why anybody should want to stay in the business. I’ve yet to see an answer to that.
This is presumably all part of things “getting better” as our current ‘leader’ has put it today. It looks more like a bum deal to me.
3% - the price of another hammer blow to justice. Just like the greedy and corrupt bankers who have wrecked our economy and reputation with impunity, the big money of the insurance industry holds sway – behind closed doors – with the Government of our country.
As Alexander the Great may or may not have said, an army of sheep led by a lion is better than an army of lions led by a sheep.
The lions share? No, they don't.