David Ward: Time to put brakes on absurd insurance premiums

We are campaigning hard in Bradford where there are particular concerns but, in truth, ever-increasing premiums are a national issue.

The causes? Take your pick. Uninsured drivers, referral fees, personal injury claims, credit-hire companies, fraudulent claims, cash for crash scams, compensation culture and so it goes on.

It is clear that there are multiple contributory factors and there will need to be a range of solutions if we are to bring back some degree of sanity to insurance premiums.

So what is the scale of the problem?

The Confused.com/EMB Car Insurance Index shows that car insurance premiums across the UK were up by 40 per cent last year, pushing average premiums to £695.

However Yorkshire – and Bradford in particular – has been harder hit than most areas with evidence that our premiums are increasing at double the national average.

The effect on younger drivers has been especially severe and there are growing signs of what one insurance executive has called an “uninsurable generation”.

Back in January, we were contacted by a man whose 17-year-old son had been quoted £26,000 to insure his first car. We have subsequently received even more extreme examples and this left us with no doubt that something had to be done.

We can all remember the feeling of excitement and freedom that came when we got our first car. Imagine the immense frustration for a young person who has worked hard to pass their driving test only to have their ambition to drive snatched away by the cost of car insurance.

What’s more, at a time when we increasingly expect young people to travel to find work, unaffordable car insurance could well cost a young person a job.

This summer we launched our local campaign for affordable car insurance.

This kicked off with a huge survey of local residents. So far we have received over 2,000 responses from people of all ages and from all parts of Bradford East. Premiums have now reached such a level in Bradford even the most experienced and responsible drivers are questioning whether they can afford to run a car.

We invited those who responded to a summit in Bradford to report back and to give them an opportunity to put questions to representatives of the motor and insurance industry and the police. We have also produced an interim report which can be downloaded from my website www.davidward.org.uk

So what are we going to do next? We now intend to work with others in Parliament on legislative changes that are needed.

Some good work has already been done by other MPs and I look forward to working with them in the future But we also need to develop our own local strategy.

Our survey respondents generated many creative ideas to deal with aspects of the problem and a local Working Group will look in more detail at these ideas.

The survey revealed that local residents believe it is the high number of uninsured drivers on the roads in parts of Bradford that is the principal cause of rising premiums.

This view is no doubt influenced by the fact that one part of my constituency has been at the top of the national league of uninsured drivers for over 10 years.

In fact, the truth is that the police are successfully tackling this problem and things are improving. Our research suggests it is the volume and cost of personal injury claims that is having the biggest impact on premiums.

The cost of injury claims is currently increasing by more than 30 per cent a year. The system is far too open to fraud and abuse.

Fraudulent injury claims have become so easy to make and so profitable that they are now being carried out on an organised scale through the growing phenomenon of cash-for-crash scams and staged accidents.

But rising legal costs have also played a big role: the average legal cost for each claim is now over £2,000 compared with just £200 in Germany.

Other countries have successfully brought legal costs under control but this will require a radical overhaul of the current system.

There is no doubt that unaffordable car insurance is a complex issue but it is one that must be tackled. Quite simply, it can’t go on like this.

David Ward is the Liberal Democrat MP for Bradford East.