It is clear that America is not the only place where a rising number of law suits are having an impact on auto Insurance rates.
As I wrote earlier this month, Car Insurance losses are effecting the bottom-line of many car insurance companies. This comes at a time when auto insurance carriers are watching some of their customers reduce their coverages, switching to higher deductibles, or dropping Full-Coverage all together. Many auto insures are finding times tough, and need to carefully watch for any sign of Fraud as well as work hard and fast to deter law suites. Lawyers, some of which are also scrambling for revenue, are taking-on cases that in other times they would turn down.
While I was keenly aware of this taking place in the world of Chicago auto insurance; I was a bit surprised by the extent that it has carried over to Britain. David Millward, writing from TELEGRAPH.CO.UK writes about a resent dramatic up-tick in claims and the cost of settling those insurance claims due to the involvement of lawyers, “Premiums to soar as accident claims lawyers push up cost of motor insurance”. Mr. writes that “Motorists are facing huge increases in the cost of their car insurance because of fraud and a spiraling number personal injury claims made by no-win no-fee lawyers. The Transport Select Committee sees no end to the surge of law suites, which have resulted in companies being forced to increase Auto Insurance premiums by nearly 40 per cent over the past 12 months. In these trying financial times this has but an additional strain of family budgets. Young drivers have been particularly hard hit seeing an average increase of 51 per cent.
“If claims continue to rise at the rate that they have been increasing, rates will continue to increase as well,” said Duncan Anderson of the EMB Consultancy.
“Bodily injury claims are increasing at a rate of 30% and other claims types are increasing by five per cent a year.”
“Overall there might be a 15% to 20% natural increase in claims costs if things continue as they are, which will be reflected in ever increasing premiums.”
Edmund King, the AA’s president told the Committee, Such rises were unsustainable.
As an agent in Chicago specializing in Auto Insurance, such news comes as little surprise. The very aggressive advertising of Personal-Injury lawyers, putting dollars signs into the minds of any person who was involved in even the smallest accidents: coupled with the reality that the cost for an insurance company to defend against a claim, is often as great as to just settle out of court.
Ashton West, chief executive of the Motor Insurers Bureau, expressed to same concerns “I think it is because of aggressive marketing on daytime TV. It is creating a view that if you are involved in an accident which is not your fault, you can collect a pot of money.
In these Hard financial times, more people are under great financial pressure, This can often lead people to take actions that their conscience would not permit in less difficult times. It is interesting to see that Chicago, nor Illinois is not alone in this matter, but that is a part of a worldwide trend.
