25 Nov 2015

  • Aviva will pass on 100% of the savings from the Government initiative to its customers
  • Expect average motor premiums to reduce by more than 10%, equivalent to £40-50


Aviva welcomes the Government's announcement today to cut £1billion from the cost of motor insurance. When the Government implements these changes, Aviva will pass on all the benefit to customers. Aviva expects average motor premiums to reduce by more than 10%, equivalent to £40-£50.

Genuinely injured claimants have one primary aim - recovery back to normal. These reforms should mean people will be able to claim for the care and rehabilitation they need, but no longer take cash for minor injuries through 'general damages'. It blocks the route being exploited by the fraudsters while still enabling genuinely injured people able to get the support they need through their insurance, as well as other damages such as loss of earnings. Those with more serious injuries will continue to have a right to retain legal advice and receive appropriate compensation.

Fraud is prevalent across the UK motor insurance market - 60% of the fraud Aviva detects is motor fraud, worth more than £57m annually. Easy access to cash from whiplash claims encourages fraudulent and spurious claims, both through opportunistic and organised crime. The volumes are staggering: Aviva currently has more than 16,000 suspicious motor claims under investigation - equivalent to 44 claims every day.

Aviva's research has found that 80% of UK motor claims are for whiplash and soft tissue related injuries, compared to 3% in France, suggesting British necks are 27 times weaker than French necks.

For many years, Aviva has defended the interests of the UK consumer by actively calling for legislative reform to combat the motor fraud problem. Provided the Government ensures the right safeguards and structures, this will be a big win for consumers.

Mark Wilson, Group CEO of Aviva plc, said:
'We welcome this bold and necessary step by the Government on behalf of honest people - it is all about standing up for the consumer against the fraudsters. The Government is putting the brakes on the whiplash gravy train. It is great news for consumers. Aviva has long championed the need to tackle the fraud pandemic in the UK motor insurance market.

'Sadly, law abiding motor customers have paid for the UK's dysfunctional and fraudulent motor claims system through inflated motor premiums. Fraud is not a victimless crime.'

'Let me be clear, Aviva will pass on 100% of the savings from this Government initiative to our customers, reducing customers' average premiums by around £40-£50 when it is implemented. We believe this allows us to focus on getting people back on their feet after an accident by ensuring it is about 'care not cash' for less serious injuries.'

Maurice Tulloch, CEO of Aviva's UK General Insurance business, said:
'As well as reducing motor premiums, this initiative should also turn down the volume of nuisance calls and texts, fuelled by some unscrupulous claims management companies. There isn't a mobile phone owner who hasn't been plagued with nuisance calls and texts. Who doesn't want fewer nuisance calls and texts? This will be a welcome relief to consumers.'


Ends

Enquiries

If you are a journalist and would like further information, please contact:
James Leach | Aviva Press Office | 020 7662 0253 | james.leach@aviva.com
Erik Nelson | Aviva Press Office | 01603 682264 | erik.nelson@aviva.com

Notes to Editors
10 point overview of Aviva's stance on reform of the UK motor insurance market:
1. Aviva believes that everyone is entitled to fairly priced insurance to protect what is important to them. We are here to help our customers when they need it, and pay genuine claims quickly.

2. However the UK motor insurance market is a system of spiralling costs which prioritises compensation and encourages exaggerated and opportunistic personal injury claims, such as whiplash.

3. Whiplash claims cost motorists £2.5bn a year, adding £93 to the average motor insurance premium. 80% of motor injury claims received by Aviva in 2014 include whiplash, a significantly higher figure than many other European countries - in France, just 3% of personal injury claims are for whiplash.

4. Third parties, such as some claims management companies, see huge financial incentives in the motor claims system as an opportunity to profit at the customer's expense. These companies plague motorists with nuisance texts and calls, encouraging them to make an injury claim regardless of their circumstances.

5. Today, the average whiplash claim is £4,500: £2,550 compensation, £1,100 legal costs, £500 for rehabilitation and £350 in other costs. This focus on cash compensation has led to bad customer outcomes and the high cost of motor insurance, which is paid for by all motorists.

6. Aviva believes the UK must urgently establish a new fair and effective compensation system for both the injured parties and all drivers. Since 2013, we have proposed a three point plan to cut motor premiums by £50, fight fraud and strike a blow to the UK's infamous 'compensation culture - in turn pulling the plug on nuisance calls and texts.

7. Our plan is simple: treat minor, short-term injuries with rehabilitation care instead of cash awards; raise the threshold at which lawyers - who add cost to motor claims - are involved, and ban all referral fees. Introduced together they would remove £1.4bn of unnecessary cost from the motor insurance market or £50 from each premium.

8. Rehabilitation - care, not cash - means those with genuine injuries receive the support they need to recover. Insurers provide necessary treatment to the injured party after the accident, access to justice is unencumbered and the compensation element is provided via rehabilitation treatment.

a. Genuinely injured claimants have one primary aim - recovery back to normal. This is their access to justice requirement. Cash compensation is secondary. Care not cash actually encourages recovery by facilitating rehabilitation where it is needed. Those with more serious injuries will continue to have a right to retain legal advice and receive appropriate compensation.
b. The threshold below which injuries do not receive cash compensation is too low - those with more serious or longer term symptoms will continue to receive cash compensation but will be assisted by being given care more quickly.
c. Making low level injuries covered by care not cash does not impact other aspects of a claim e.g. vehicle repairs, mobility, and loss of earnings. These are often far more urgent and will be dealt with more quickly.
d. Customers who purchase Before The Event or Legal Expenses Insurance will still be able to call upon these policies for assistance. These products become much more valuable and will help the customer make a claim if needed
e. Insurers will step forward to actively offer rehab - like they do hire cars - to avoid additional costs of rehab sourced elsewhere. This is a better, cheaper provision - everyone wins.

9. Aviva's plans show it is possible to cut the cost of motor insurance while ensuring the genuinely injured party gets the care and compensation they deserve. They also address the text pests that phish for even the most spurious claim by reducing the financial incentives. When surveyed by Aviva, 64% of consumers agreed this would be a better means of compensating minor whiplash injuries than cash and 95% would like claims management companies to face tougher regulation over how they market their services.

10. With motor insurance premiums again rising fast - 6% in the last year according to the ABI - we cannot afford to waste more time overhauling the system to put motorists' interests first.

Aviva's statements on the topic and video footage is available at https://www.aviva.co.uk/car/motor-advice/article/avivas-road-reform-time-tackle-uks-compensation-culture/

About Aviva

  • Aviva provides life insurance, general insurance, health insurance and asset management to 34* million customers, across 16 markets worldwide
  • In the UK we are the leading insurer serving one in every four households and have strong businesses in selected markets in Europe, Asia and Canada. Our shares are listed on the London Stock Exchange and we are a member of the FTSE100 index.
  • Aviva's asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages over £245 billion in assets.
  • Aviva helps people save for the future and manage the risks of everyday life; we paid out £24.6 billion in benefits and claims in 2014.
  • By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.
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