Parliament expects the insurance industry to deliver on pledges to pass on discount rate reform savings and will be monitoring its progress, Lord Keen of Elie told a conference.
The Ministry of Justice spokesman spoke at the Association of British Insurers’ motor conference on the Civil Liability Bill.
The bulk of the motor market has promised to pass on savings clawed back with a change to the discount rate and personal injury reform to customers. However Lord Keen warned that if insurers do not deliver, then the government expects there will be a “robust” system in place to monitor whether their behaviour matches their commitment.
He said: “The government welcomed the public commitment received from leading insurers that they would pass on the cost savings made following the implementation on these reforms. Having made this public pledge, the government fully intends to hold you to it and will be monitoring the effect of these reforms on the price of premiums.
“Many of you would have noticed that during the passage of the bill, parliamentarians were unsure that savings from the reforms would truly be passed on to customers. However having made such a welcome public agreement to pass on the savings, we agree that a robust way of monitoring this commitment is required. And that is why the government has amended the bill to ensure that the level of savings passed on will be monitored by the FCA and reported on to parliament.
“I accept that this will be a significant change for insurers, who will need to comply with this stringent new requirement, but am confident that the sector will embrace the need for this and the benefits to consumers which will follow. That includes not only cost, but also consumer confidence.”
Despite the warning shot, there was good news for insurers.
Keen revealed he expects the first call for evidence for the setting of a new rate to happen “very shortly”.
He added: “I know there will be a very clear interest in how the insurance sector are willing to be held to account for commitments that have already been made. I should say that the passage of the Civil Liability Bill should, I hope be straightforward, because as of this morning we received no intimation of any further amendments to the bill. I’m briefly confident that it will pass in the very foreseeable future and that it will receive royal assent in the very foreseeable future.”
Keen is this afternoon attending the House of Lords, where parliament’s amendments to the bill will be considered.
- Loss-making GRP spent £112.6m on acquisitions over its last financial year
- Mike Bruce promoted to GRP group managing director
- Hiscox's James Brady on why cyber knowledge remains a barrier
- I work in insurance: Stephanie Horton, River Canal Rescue
- Top 100 Insurtech: Quarter four update
- Insurtech diary: Getting stuck into insurance
- Charles Taylor bolsters liability team by hiring senior sextet from Vericlaim