One of our Costs lawyers had a moment of déjà vu earlier this week when reading comments from James Dalton, head of motor and liability at the Association of British Insurers, in relation to compensation payments.
Dalton commented ‘High compensation awards mean higher car insurance premiums,’ he told the Claims Magazine conference in Manchester.
‘If insurers pay less in compensation, insurance premiums will reduce further. And the industry will have more capital available to invest in well-run companies or infrastructure to support the economic growth which [the] budget reminds us is so desperately needed.’
Upon reading these comments I couldn’t help but think that we’d been here before with promises of lower insurance premiums and after a bit of research I came across similar quotes from Mr Dalton in February 2012.
‘The UK’s compensation system is riddled with disproportionate and excessive legal costs, often exceeding compensation awards. This means higher insurance costs for motorists and businesses and a heavy cost burden on local authorities and the NHS’
‘Lower legal costs will help bring down the cost of motor insurance for all drivers.’
We already know that the impact of the Jackson Reforms on the cost of insurance premiums is going to be negligible at best with the managing director of LV, one of the country’s largest insurers, only earlier this month saying that he expects premiums to come down by no more than 3%.
Therefore, it would be fair to say that Mr Dalton’s previous prediction of lower premiums is unlikely to come to fruition. I ask you to forgive me then when I say that I will take his latest promises of lower insurance premiums with a pinch of salt.