Direct Line pleased with mps response to the cost of motor insurance

• Whiplash finally recognised as the major contributing factor for the rise in car insurance premiums
• Recommendation to stop unwanted, unsolicited ‘have you suffered an injury?’ texts and emails
• Recommendation for the bar to be raised to receive compensation in whiplash cases

Direct Line fully supports the findings and recommendations of today’s Transport Select Committee’s (TSC) follow-up report on the cost of car insurance. Believing it to be damning evidence of how the compensation culture and the resulting scourge of whiplash claims, have been the most influential factor in car insurance premium inflation.

The TSC’s call to Government to impose a higher threshold for the payment of any compensation in whiplash cases demonstrates how flawed the current system is. Unscrupulous ‘claims culture vultures’ have for too long benefited from using or fraudulently claiming an injury that is very difficult to disprove to take millions of pounds from British consumers in the form of higher car insurance premiums.

The TSC’s call for the banning of referral fees across the board and not just for personal injury claims as currently planned is fully supported by Direct Line. However, not only a ban on referral fees is required, but a fundamental change in the personal injury legal process and the subsequent reduction in fixed legal costs has to be implemented if premiums are to reduce.

Tom Woolgrove, Managing Director of Personal Lines at Direct Line, said: “We have been calling for a review of whiplash claims for many years now and it is high time that the UK's compensation culture had a rude awakening. A common sense approach with some harder proof of injury and associated loss is what is needed, so we can ensure genuine claimants receive compensation for whiplash. The Committee are also entirely correct to point out that referral fees need to be banned across the board. However, as highlighted by Direct Line previously, lawyers fixed costs also need to be reduced.

"I am sure that claims management companies and 'cold callers' are already looking for loopholes and new ways to get around the proposed legislation to combat the problem. We are committed to bringing about the change needed to bring down the cost of motor insurance for our policyholders. It is bad for business, for consumers and for society as a whole. This report shines a light on the cracks in the current system."

Direct Line is also pleased that the following matters were raised:

• At a time when road traffic accidents are decreasing, the Compensation Recovery Unit is receiving an unprecedented and increasing level of personal injury registrations.
  A paradox raised by Direct Line in 2010. It can be no coincidence that at the same time there has been an explosion in the number of Claims Management Companies (20 per cent year on year) and an increase in their revenues; this is particularly true in bodily injury ‘hotspots’ such as the Northwest.
• The call on the Government to initiate an investigation of cold calling intended to generate personal injury claims, with a view to examining the legal and regulatory options for curtailing this activity.
  Direct Line’s own consumer research highlighted the continuous harassment of consumers and showed that 11 per cent receive an unsolicited text, 22 per cent receive an email and 6 per cent were stopped in the street, to be asked if they have suffered an injury in an accident. Direct Line do not pass unsolicited policy holders details to any third party.
• We are not convinced that a diagnosis unsupported by any further evidence of injury or personal inconvenience or loss arising from the injury should be sufficient for a claim to be settled. In our view, the bar should be raised for genuine claimants to receive compensation in whiplash cases.
  Direct Line believes that placing the onus on the claimant to prove their injury and their loss would reduce the ridiculous situation that has allowed 76 per cent whiplash claims as a proportion of personal injury in the UK. This is twice the average percentage of claims compared to nine other European countries including; France, Spain, Germany and Italy.

For further details on Direct Line Car Insurance visit 

ENDS

For further information please contact:

Simon Henrick,
Direct Line Press Office
Tel: 0208 313 5965
Mobile: 07833 166 717
Email: simon.henrick@rbs.co.uk

Direct Line

Started in 1985, Direct Line became the first UK insurance company to use the telephone as its main channel of communication. It provides motor, home, travel and pet insurance cover direct to customers by phone or on-line.

Direct Line is part of RBS Insurance, the number one car and home insurer in the UK (based on policies in force 2010) and is wholly owned by the Royal Bank of Scotland Group. Customers can find out more about Direct Line products or get a quote by calling 0845 246 3761 or visiting 

Direct Line insurance policies are underwritten by U K Insurance Limited, Registered office: The Wharf, Neville Street, Leeds LS1 4AZ. Registered in England and Wales no 1179980. U K Insurance Limited are authorised and regulated by the Financial Services Authority.