Following the news that Justice Secretary Liz Truss is launching a consultation into the discount rate of the personal injury compensation scheme, new data from uSwitch.com reveals more than four in five consumers (83%) don’t believe insurers should increase the cost of insurance premiums to cover additional costs brought on by the compensation law changes. Nearly three-quarters (70%) also agree that insurers should be responsible for paying the whole compensation sum to the victim of an accident, rather than a reduced rate that accounts for interest earned by investing the pay out.
However, with the current reforms meaning car insurance costs could rise by up to £300 for older drivers, three in five (58%) said they don’t think the changes are a good idea. uSwitch is calling on insurers to absorb the cost of these reforms rather than passing them onto customers.
Rod Jones, insurance expert at uSwitch.com, comments: “Insurers must face up to the fact that compensation reform is overdue. The Ministry of Justice is right to protect the rights of claimants seeking full and fair compensation and we hope this latest consultation doesn’t see insurers shirking their responsibilities.
“Let us not forget that insurers have only just won a huge victory on recent whiplash reforms, which is likely to reduce the number of claimants who will receive a pay out. Passing on the cost of the amended discount rate would be a gross example of the insurers having their cake and eating it too.”
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Notes to editors
Research carried out online with the uSwitch.com Consumer Opinion Panel between 14.03.17 and 21.03.17 amongst a sample of 2,921 GB adults.
- When asked “Do you think insurers should be allowed to increase the cost of insurance premiums to cover this additional cost?”, 82.9% answered “No”
- When asked “Should insurers be responsible for paying the whole compensation sum to the victim of an accident?“, 69.6% answered “Yes”
- When asked “Do you believe the proposed changes are a good idea”, 58% answered “No”
When answering the questions above, respondents were given the following context:
Recently, the government proposed changes to the compensation rates for victims of car accidents that car insurers pay out in the result of an accident. Previously, insurers would only have to pay 97.5% of the total compensation fee, as it was assumed the victim would invest part of their compensation to make up for the 2.5% remaining. Now the Ministry of Justice has decided to reduce the discount rate from 2.5% to minus 0.75%. This will result in more money for the victim, but a higher cost for the insurer.
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