Aviva: Car Insurance Premiums Could Fall by £1.5bn if Insurers Handle Claims Directly

Car Insurance Premiums Could Fall by £1.5bn if Insurers Handle Claims Directly

  • Whiplash claims now add £118 to every motor premium
  • 94% of motorists blame involvement of third parties for increased premiums

UK drivers overwhelmingly want to see the back of the personal injury (PI) ‘compensation culture’ that is now costing every motorist an extra £118 on their annual motor insurance premium, reveals Aviva in a new report issued today.

Aviva’s report ‘Road to Reform: Reducing Motor Premiums by Reforming the Personal Injury Claims Process’ is launched ahead of the Ministry of Justice Whiplash Consultation closing on the 8th March 2013. The report sets out Aviva’s proposals to improve the motor insurance PI claims system and reduce excessive costs that have contributed to premiums rising by 80% since October 2008. Aviva’s research has also found that if insurers handled claims directly, an estimated £1.5bn of excess cost could be stripped from UK motor insurance premiums.

Dominic Clayden, Claims Director at Aviva, said: “Our primary concerns are that injured parties receive care and compensation as quickly as possible and that all motorists benefit from a reduction in the excessive costs that have built up in claims over the past few years. We are campaigning for a more efficient system that removes the ‘interested parties’ and requires people to deal directly with the insurer of the at-fault party.

CUTTING WASTE FROM THE SYSTEM

Central to Aviva’s proposals for reform is its call for a legal requirement on PI claimants to contact the ‘at fault’ insurer in the first instance rather than going to or being referred to intermediaries including claims management companies and PI lawyers. This will result in a halving of the cost per claim as third party legal fees (average current legal fee is £2500 for a ‘typical’ whiplash claim) are removed from low-value personal injury claims, a saving that will benefit all motorists in reduced premiums.

Aviva’s research shows that there is no difference in the compensation awarded to the injured party if handled directly or via third parties. However, the multiple third parties that can get involved in a claim add significant cost in fees. Aviva estimates that handling claims directly will cut £1.5bn of excess cost, approximately 50% of the current cost of handling the 550,000 whiplash claims received by insurers every year. This cost reduction could lead to premium falls of around £60 a year for the average driver.

CARE RATHER THAN CASH COMPENSATION

Aviva also supports the introduction of a truly independent panel of medical experts to determine whiplash cases with a greater focus upon targeted rehabilitation, which consumers support.

Aviva research of over 2000 drivers revealed that almost 2 in 3 (63%) think that people seek compensation to get money to spend on whatever they choose rather than rehabilitation. This view is supported by Aviva’s research of almost 400 UK drivers who have made a PI claim; this revealed that only 33% of people spent their cash compensation on medical treatment or physiotherapy, others said it was used to pay off household debt (29%), to buy luxury items such as TV’s (12%) or to go on holiday (9%).  Other uses admitted to include buying a car, putting it into savings and paying for university.

WHAT DRIVERS THINK

Aviva’s research of UK motorists shows they identify a strong link between rising PI claims and rising premiums, with 95% saying unnecessary claims are behind premium increases. Additionally 94% blame the involvement of third parties and 93% the rise in whiplash claims specifically.

The changes that the majority of motorists back are as follows:

  • No cash compensation for minor motor accidents where no-one was injured – simply the insurance cover for the cost of repairing the vehicle (85%)
  • A preference for care above cash – insurers should provide access to rehabilitation for their injuries, not cash compensation (55%)
  • A ban on excessive legal fees (69%) and the unnecessary involvement of lawyers or claims management companies (67%)
  • Independent medical advisers not connected to the person making the claim to assess injuries (59%)
  • Tighter regulation on how claims management companies and personal injury lawyers market their services (95% support)
  • A removal or clamping down on exaggerated claims via more stringent procedures to challenge suspicious minor injury claims. (83% support)

Dominic continued, “Our figures for average compensation settlements show that dealing direct with an insurer directly results at least as much compensation for the claimant and has the advantage of being quicker – meaning their treatment and rehabilitation can start almost immediately. Our focus is on their recovery and settling their claim quickly and fairly. It would also prompt a significant reduction in the costs of the current system which would benefit all UK motorists, who will begin to see a reduction in their premiums.”

 

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Aviva General Insurance: Rams, prangs and automobiles – Early Drivers’ Extraordinary Encounters

A hundred years of Aviva claims reveal how the hazards of the road have changed

Rutting rams, startled horses, and drivers’ widespread inexperience are among the chief reasons for historic claims unearthed by the UK’s largest insurer.

Aviva’s archives shed light on a time when there were just 89,000 cars on the road – one car for every 400 people (1911).1 In the early days of car ownership, accidents were actually more common despite there being fewer cars on the road. There was one accident for every 14 vehicles in 1930, the first year statistics were available. Today the figure is one for every 222 vehicles2 with almost 30 million cars and motorbikes on the road.

 

Rutting rams, highly strung horses and the odd elephant

Claims dating back to 1911, when there were 3.2m horses in the UK3, outnumbering cars by 36 to 1, show the convergence of animals and the new four-wheeled wonder causing some strife. Claims include:

–       a farmer who claimed after his horse died from shock at the sight of a passing motor car (1911)

–       a well-polished van that came under siege from an aggressive ram which mistook its own reflection to be a rival male and butted the side of the vehicle (1953)

–       a horse that ate a car’s rear lamp (1957)

–       a car whose softtop covering was destroyed by a horse found nearby ‘chewing with a very satisfied look on his face’ (1956)

–       an elephant from a passing circus reaching his trunk through a car window in search of food, eating the driver’s lunch, and smashing the windscreen in the process. (1934)

–       a delivery van that crashed into a ditch due to the panic caused by a mouse running up the driver’s trouser leg (1954)

–       a car that crashed after a cat leapt onto the driver’s head. “This action and the cat’s claws digging into my head, made me lose control of the car and I collided with a lamppost” (1954). And overseas, a lion crawled into the back seat of a car for a sleep, then proceeded to rip apart the interior when the claimant drove off and woke the lion (1955)

 

Motoring marital strife

It also seems the freedom granted by the dawn of widespread car ownership led to some tricky situations between the sexes. Mothers-in-law in particular are mentioned on numerous claims including one claimant who, when asked about the purpose the car was being used for at the time of the accident, said: “collecting my mother-in-law to stay with us…which perhaps should not come under the heading of pleasure purposes” (1966), and another saying “For pleasure. Attending mother-in-law’s funeral.” (1956)

However beware a woman scorned, as one wife cancelled her husband’s claim, leaving him to foot the whole bill, when she realised that the two witnesses to his accident were women he had met that day in Eastbourne. “In so far as he had not satisfactorily explained to me how he happened to be entertaining two strange young ladies on the Sussex Downs at 10:30pm, I am not troubling to claim.” (1932)

Bygone days

As cars became more affordable and common, it was not just animals who struggled to cope with the novelty of widespread car ownership. One driver cancelled his insurance in 1955 after his first foray in to motoring ended in disaster saying poetically: “the tortured metal of the engine…has scattered itself broadside about the roads of Buxton. In view of this I am retiring disillusioned from the field of modern mechanics and returning to the faithful friend of man, the horse with four legs.”

In another claim, a car in Scotland was damaged by a tide of neeps (turnips) after a farmer loaded a trailer with the vegetables at the top of a sloping field. The trailer bounced down the field, jumped a low wall and crashed into the front of the car. Drawing a sketch on the claim form to illustrate the incident, the claimant went so far as to indicate which turnip in particular did the damage. (1965)

The lack of familiarity with the car also had a dangerous side, with one injury claim from a man who had “struck a match to endeavour to discover a petrol leak.” (1938)

Rob Townend, director of motor claims at Aviva, said “The motor industry has undergone a huge change in the past century, from a time when owning a car was the preserve of the very rich and seeing one would be a rarity, to the modern day where there is almost one car for every two people. While there were fewer cars on the road back then, fewer road laws and less experienced drivers meant the chances of being involved in an accident were much higher.  These historic claims really illustrate what a steep learning curve both drivers and pedestrians faced.”

“Despite being less prevalent, accidents with other drivers are still the most common motor insurance claims,  so whether it’s for a ram butting your vehicle or a bump in a car park, it pays to make sure you have the right cover in place.”

Aviva’s archive also reveals that among those insured4 were King George V, US presidents Kennedy and Eisenhower and Hollywood actress Merle Oberon. It also insured the original Chitty Chitty Bang Bang car from the 1968 film.5

Aviva comments on strong Q2 Equity Release Council figures

Roger Marsden, head of at retirement at Aviva, said:

“Today’s figures from the Equity Release Council clearly show that using housing equity to improve retirement finances is becoming increasingly popular.  This is good news for not only the market in general, but also for consumers. 

“Many facing retirement with a shortfall in their savings are often worried about releasing the equity in their homes to improve their standard of living. However, due to concerted efforts from the Equity Release Council, providers and intermediaries alike, attitudes are changing. With the reassurance of no negative equity guarantees and the introduction of inheritance guarantees, more people are now taking a holistic view of all of the assets available to them at retirement, including the value held in their own property.

“We believe that today’s figures signal a return to positive growth for this market and we expect that 2012 will be a better year for equity release than 2011.”

From the top

 

Wriglesworth has restructured its senior management roles this month, with Laura O’Connell, Director and head of the Financial Services team, being promoted to Managing Director and John Wriglesworth, founder and previously Managing Director becoming Chairman and Chief Executive Officer, a new role in the consultancy.  We’ve talked to Laura to find out more.

Why has Wriglesworth reorganised its senior Directors’ roles?

Creating two senior roles to lead the business gives us a much greater resource to drive forward our operational performance and strategic development. We are at an exciting point in our development, with an excellent reputation as a sector specialist agency, great clients and talented staff. We intend to build our business as sector specialists, offering outstanding strategic and creative support and integrated communications solutions to our clients, and we are putting in place the right senior team to achieve this.

What does becoming Managing Director mean for you?

As MD, I will focus on managing the operational aspects of our business, so effectively everything that relates to what we do for our clients. This includes how we run our existing services, the launch of new services, and our people development. I’ll work with our staff across the consultancy to keep driving our standards and achievements ever higher.  

How will your role differ from John’s as Chairman and CEO?

John will focus on the financial and broader strategic development aspects of the business.  Both of us will continue to work on new business and strategic client work.

How will this impact on your role in the Financial Services team?

I will still be very much involved with our financial services team and clients, particularly working on strategy development and critical issues. I’m supported by an excellent team of talented people who work for our clients, day in, day out.

What have been the highlights of your career so far?

Prior to Wriglesworth I was the first Head of Communications at Direct Line Group, when the company was making waves as a new force in insurance and financial services. I was lucky to get the role when I was still in my 20s and it was enormously challenging but hugely rewarding – a classic case of ‘sink or swim’.  I had to handle PR for a business that was growing dynamically and led by a high profile entrepreneur – you can imagine there was never a dull moment! Subsequently the same could be said of my role here at Wriglesworth as one of the founding Directors; it has been amazing to have helped develop a business from scratch to be an award winning and leading consultancy for its specialist sectors. It has been particularly satisfying to have created so many jobs over the years and nurtured so many other PR careers.

What do you do when you’re not at Wriglesworth?

I think the core gene of a PR person is to be active and busy and that’s pretty much how I am – sport and keeping fit, keeping up with the latest in theatre and the arts generally, plus plenty of general socialising. I have two children so that keeps me busy too!

Over-55s throw a lifeline to families drowning in sea of bills

  • 41% of over-55s claim to have helped their families and close friends out financially in the past 12 months
  • The typical amount provided was £1,430 (9% of their average annual income)
  • 31% provided money specifically to help pay bills

Aviva’s latest Real Retirement Report has discovered that theUK’s over-55s are choosing to spend a significant amount of their retirement income on supporting their loved ones financially.

Just under half (41%) of the UK’s over-55s have provided financial assistance to their families and close friends in the last year, with the typical amount provided totalling 9% of average annual income (£1,430).

Most likely to have received financial help were adult children (23%) and grandchildren (13%). People who are typically ‘retiring’ (aged 65-74) are the most likely to have helped their adult children in the last year (28%). Significantly, 20% of the long-term retired (over 75) have given financial assistance to their children in the last year, despite the fact they are most likely to be surviving on a fixed/limited income themselves.

The main reason for over-55s to provide financial help was to help pay off debts/bills (31%), followed by one-off costs (17%), or topping up income (17%).

Source: Aviva Real Retirement Report                                                                                                              

The UK’s over-55s are not just providing financial help to their children and grandchildren, as 4% of over-55s said they had helped pay for care costs/support for their own ageing parents in addition to providing a financial top-up (2%) to their income. While a smaller percentage of over-55s have provided financial assistance to their parents, the average amount provided is higher, with pre-retirees (55-64) providing an average of £3,280 per year.

The cost implications:

The impact of providing this financial support for those moving towards retirement or on a fixed income is significant, and 75% of those over-55s who had provided assistance said it had impacted on their financial planning. More than a third (37%) of over-55s said it has resulted in them dipping into their capital and they now have less in savings/investments than before, and almost a quarter (23%) found they had less to spend on day-to-day expenses.

Non-financial support:

It is not just direct financial support that over-55s have been providing though, as the Real Retirement Report found 46% of over-55s provided some form of non-financial help in the last year. Typical non-financial assistance included: helping out with transport needs (41%), providing general help around the home such as odd jobs (35%) and providing childcare (34%).

However, even non-financial support has a cost and 6% of over-55s said the provision of support (both financial and non-financial) had meant they had had to delay retiring, 4% that they had retired early to look after older family members, and 2% re-entering the workplace part-time to generate/replace lost income.

Clive Bolton, ’at-retirement’ director at Aviva“Every age group has come under financial pressure as a result of the current economic situation, but the over-55s have their own unique pressures. Traditionally, this is when they are finalising their retirement plans or surviving on a fixed income, and so unplanned costs and supporting others can have a significant impact on their future standard of living.

“As such, people need to plan for the unexpected when they are thinking about their retirement income. Life rarely goes as planned and so it is vital people budget for extra costs such as helping out their adult children or parents financially, or even what they will do if they or their partner are unable to work for as long as they had planned. Building up a contingency fund will mean they can protect valuable retirement capital as this will need to last them their lifetime.”

 – Ends –

Aviva Family Finances Report: Families fail to protect loved ones as they avoid difficult conversations

The full Aviva Family Finances Report can be found on Headline Money

FAMILIES FAIL TO PROTECT LOVED ONES AS THEY

AVOID DIFFICULT CONVERSATIONS 

  • More families have satellite television (50%) than life insurance (40%)
  • Sex is only topic of conversation more taboo than finances for UK families
  • Booking a summer holiday is more of a priority in 2012 than taking out life insurance

UK families are putting luxuries ahead of protecting their loved ones financially, the latest Aviva Family Finances Report reveals today.

The report discovered that while 50% of families are happy to pay for a satellite television package, just 40% have life insurance. It also found families are more likely to have insurance for their mobile phone (14%) than insurance that will protect their family financially if they were to suffer a critical illness (13%). Similarly, more people have taken out an extended warranty on electrical items (13%) than have income protection insurance, which would potentially pay an income for life should they be unable to work as a result of an accident or illness (10%).

Lack of understanding

The report also reveals the majority ofUKfamilies are avoiding the issue of what they would do if something happened to an income earner, because they find discussing their finances and mortality ‘uncomfortable’. This is in spite of the financial worries that could be caused by not having protection, exacerbating emotional distress at a difficult time.

More than a quarter (27%) of families admitted they would not want to discuss their debts with their family, and 24% would not even discuss their general finances. The only topic that makes families more uncomfortable than finances is ‘sex’ (56%).

Prioritising protection

As a result, many families ignore the issue and fail to appreciate the value of protecting their family, compared to spending on other items.

Looking at the monthly sums paid for different products and services, families pay almost double the amount for satellite TV than they do life insurance (see table below), and they pay only a small amount less for mobile phone insurance, regardless of the huge difference between what these plans are worth in the event of a claim. Despite this, 27% of families said they thought a satellite TV package was worth spending money on, compared to just 3% who said the same about a life insurance policy.

 Families questioned for the Aviva Family Finances Report said they paid the following average amounts each month (January 2012):
Satellite TV package £35.75
Life insurance £20.88
Critical illness insurance £20.72
Home internet package £18.89
Income protection insurance £18.67
Pet insurance £16.60
Mobile phone insurance £12.33

Families plan to get their finances in order

The impact of inflation, pay freezes, and benefit cuts has causedUKfamilies to re-evaluate their financial priorities for 2012, and the two most important measures they plan to take this year are cutting back on their spending (39%) and paying off their debts (35%).

However, there is still a lack of understanding about the value of protecting their families financially, as more families are prioritising booking their annual holiday (21%) than are planning to buy life insurance (3%).

Louise Colley, head of protection sales and marketing, Aviva, says:

“No-one likes to dwell on poor health or mortality, but by denying that illness – or worse – is even a possibility, people are stopping themselves putting measures in place to protect their loved ones. Too many people assume that someone else will step in and look after their families if they weren’t there to provide for them, but the reality is very different.

“People need to ask themselves just how they would pay for their accommodation, their food, and all the other costs of living, should they suddenly lose an income. While no-one likes to think about ‘what ifs’, by not even considering these scenarios, people could be putting the future financial security of their families at unnecessary risk. So many customers report feeling ‘peace of mind’ when they take out life cover, knowing their affairs are in order, so we’d urge families to overcome their taboos and put protection in place.”

To find out more about life insurance from Aviva, customers can visit www.aviva.co.uk/life-insurance or call 0800 068 5549.

– Ends –

* The Aviva Family Finances report is an in-depth study into the financial needs of the 84% of theUKpopulation who live as part of a modern family. Based on customer profiles and Government data Aviva has recognised the six most common types of modern family as:

–         Living in a committed relationship with no plans to have children

–         Living in a committed relationship with plans to have children

–         Living in a committed relationship with one child

–         Living in a committed relationship with two or more children

–         Divorced/separated/widowed with one or more child

–         Single parent raising one or more child alone

Methodology:

Data was sourced from the Aviva Family Index which used findings from over 10,000 people who are members of one of the six groups of families identified above via OpinionMatters. This report is a definitive look at the personal finances of families in theUK. Not only does it look at personal wealth, income sources and expenditure patterns but also tracks how these change across the different types of family unit.

In addition to the regular data, each quarter a spotlight will be shone onto a different relevant topic. This issue has a focus on how families are failing to protect their loved ones financially, by avoiding thinking about ‘what if the worst were to happen?’