Blog: Could latest insurer tiff over motor claims costs derail CMC reform?

Cats fighting

At the end of last month the Association of British Insurers made its latest plea to the government to tackle claims management companies amid rising motor prices.

It came as the ABI reported that:

- Data from the Ministry of Justice's claims portal indicated the number of personal injury claims relating to road accidents was 12% higher for the year ending April 2015 compared with the previous 12 months.

- The average price paid by motorists for an annual comprehensive motor insurance policy had risen by 2.1% in Q2 2015 compared to the first quarter.

But whilst the ABI's manager for general insurance Rob Cummings welcomed the review of the activities of claims management companies unveiled in the Budget, any hope of the market putting up a unified front was being somewhat undone by a cat scrap breaking out elsewhere to explain rising motor premiums.

A cat scrap that was ignited when Aviva's global claims director David Lovely criticised market rivals for not putting their money where their mouth is in the fight against fraud - "last year we took more cases to trial than the rest of the industry combined" - and accused others of "feeding the beast" by establishing alternative business structures.

It was no surprise rivals hit back, with Direct Line Group claims director Steve Maddock leading the charge commenting that there was no evidence insurer-managed ABSs were fuelling claims frequency, indeed he suggested it was having a positive impact on the numbers.

Others pointed out that for all Aviva's bravado, it had yet to sign up to the Insurance Fraud Register.

Although some might argue this makes for good copy, as an industry, one wonders what the decision makers will make of all this sniping as the MoJ gets ready to open up a review CMC regulation - the carrot the Government gave the sector to counter the bitter pill of the insurance premium tax rise.

I hope that this tiff does not divert attention elsewhere, or cloud the one issue that I think Aviva, DLG and every member of the ABI agrees on: that CMC regulation could certainly be better.

It should be remembered that it is less than 12 months that divisions among the ABI members was one of the factors posited why the sector came up short in its efforts to encourage the Competition and Markets Authority to review credit hire.

Could history repeat itself if the finger pointing over motor insurance costs continues? I hope not.

Which brings me onto this next Claims Club meeting four weeks from today, when members will have a chance to quiz Kevin Rousell, the Claims Management Regulator head on what CMC regulation 2.0 will look like.

The slot comes at a good time for Rousell, with the regulator finally showing some teeth with The Hearing Clinic being slapped with a £220,000 fine following hundreds of complaints from members of the public who received speculative calls about noise-induced hearing loss claims.

I am sure he will be interested in hearing your views, so make sure you sign up for a Claims Club session, which will also explore the use of drones for insurance claims, an area of increasing topicality.

The meeting will also feature Tim Humphreys, senior associate, Financial Conduct Authority and the person responsible for delivering the thematic review of SME insurance claims.

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