Justice Secretary Chris Grayling announced today (23 October) that the government has announced a raft of measures to help reduce the cost of driving. If you don’t take into consideration the cost of purchasing a car, the UK is one of the more expensive places in the world to drive, so these new initiatives will be welcome by millions of motorists who are struggling, and especially those just starting to drive who tend to earn less.
Average motor insurance premiums are already down a healthy 12.3% from £648 to £568 over the past 12 months according to the AA, and that’s worth around £80 back in your pocket. The government has also cut income tax for 25 million people by raising their personal allowance, freezing council tax and helping with tax-free childcare, but it is aiming to do more.
Reducing whiplash fraud
Reducing the overall cost of insurance will be targeted by focusing on whiplash fraudsters.
“It’s not right that people who cheat the insurance system get away with it while forcing up the price for everyone else – so we are now going after whiplash fraudsters and will keep on driving premiums down.” says Mr Grayling. “We are turning the tide on the compensation culture and helping hard working people by tackling high insurance premiums and other motoring costs.”
The Ministry of Justice’s Claims Management Regulation unit has provided figures that show the number of claims firms, which promise profitable compensation claims, has plummeted from 2553 in December 2011 to less than 1500 in September 2013 since law changes aimed at eliminating rogue firms and curbing no-win, no-fee activities. The number of claims has fallen, but still remains an issue – half a million claims were lodged in 2012. This costs insurance companies over £2 billion in payouts which adds £90 to your premium. Each whiplash payout costs £2000 in legal costs and £2400 in compensation.
In February 2012 the insurance industry committed to passing on savings to their customers and since then the reforms the Ministry of Justice has made are:
- Transformed no win, no fee deals so lawyers can no longer double their fees if they win, at the expense of defendants and their insurers.
- Banned “referral fees” paid between lawyers, insurers, claims firms, garages and others for profitable claims – which have driven the growth of compensation culture.
- Reduced by more than half the fees lawyers can charge insurers for processing basic, uncontested claims for compensation for minor injuries suffered in road accidents – from £1,200 to £500.
- Banned claims firms from offering cash incentives or gifts to people who bring them claims. Recommend a friend deals were also banned, along with contracts agreed only over the phone.
To reduce fraud further, new independent medical panels will be established which will only consider evidence from accredited professionals, ensuring that genuine cases are still considered. Insurers will also be sharing data more effectively and the Insurance Fraud Enforcement Department will benefit from this.
The gradual improvement of vehicle quality should also reduce whiplash claims as almost all new cars come with whiplash-reducing headrests and ever more efficient passenger protection.
Freezing MOT test prices
The statutory maximum price of the MOT test for a car will be frozen at 54.85 until 2015, rather than increasing the price by £4, potentially saving up to £50m for drivers every year.
Promoting competition in petrol pricing
Petrol can be expensive, especially at motorway service stations. New comparison signs will show petrol prices at different stations along a route to encourage competition and to give motorists more transparent information.
Reviewing the cost of taking your driving tests
If you are taking your driving test (remember, you can practice your Highway Code for free on our site), Mr Grayling has announced that the fees for taking the theory test (£31), practical test (£62) and provisional licence (£50) will be reviewed to see if any savings can be made. 1.5 million drivers take a test every year and many of them are young and short of the resources required.
Roads Minister Robert Goodwill said, “The costs of owning and running a car are felt by millions of households and businesses across the nation. The government is determined to help keep those costs down. That is why we are freezing the price for an MOT test and looking again at the costs associated with getting a driving licence. We also want to make it easier for people to get a better deal on fuel at motorway service stations, for instance through a trial of motorway signs that will show motorists the different fuel prices on offer on their route.”
- View the AA’s insurance update.
- The number of compensation claims are published by the Department of Work and Pensions Compensation Recovery Unit. Of the 820,000 motoring personal injuries in 2012/13, 480,000 were recorded as whiplash claims.
- The £90 figure above was published by the Association of British Insurers. The ABI also report that in 2011 there were 45,000 bogus dishonest motor insurance claims detected. Savings of £441 million were made by the industry from the claims uncovered.
- The number of reported road accidents are published by the Department for Transport at www.dft.gov.uk/statistics/tables/ras40007/ andwww.dft.gov.uk/statistics/tables/ras45009/. These reduced from 189,000 in 2006 to 151,000 in 2011.