For all drivers, motor cover is one of the few compulsory insurances. Premiums have been escalating at an alarming rate, rising by 80 per cent since October 2008, according to Aviva.
They have been inflated by whiplash claims which Aviva says add £18 to every motorist’s premium.
Insurers blame such a swingeing increase on whiplash injuries, which stigmatises the real victims of serious accidents.
Currently, the Competition Commission is investigating the insurance industry which the OFT chief executive describes as “dysfunctional.”
The truth is that insurance companies instigate most such claims to justify ever rising premiums.
The world’s first publicly listed law firm, Slater & Gordon, founded in 1935, commissioned an Ipsos-Mori poll of accident victims.
The research revealed that insurers are behind 65 per cent of personal injury claims. Claimants are taking action on the specific advice of their insurance firm.
An amazing 55 per cent of those interviewed would not have otherwise pursued a claim.
At a stroke, insurers could reduce the cost of each premium by almost £50, according to Neil Kinsella of Slater & Gordon, and save the UK economy over £1bn annually.
They just need to stop encouraging those they insure from making ill-advised claims.
Mark Wilson, who became head of Aviva only in January, has never worked before in UK insurance. A New Zealander, his working life has been in Australasia (for National Mutual) and Asia (for both AIA and French insurer AXA).
He admits that the company has lacked direction, spread resources too thinly, wasted capital and been inconsistent on strategy.
A time now listening and looking at the UK insurance market would be well advised.
Along with other insurance leaders, they should admit they have been driving up premiums and ensure a downward direction immediately.
The current consultation should show up these practices. Before the financial headlines sound like the horse contamination in food, insurers can and should clean up their act.
Honesty always pays.