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TMCNet:  MPs condemn 'highly dysfunctional' motor insurance market [Western Morning News (England)]

[July 04, 2014]

MPs condemn 'highly dysfunctional' motor insurance market [Western Morning News (England)]

(Western Morning News (England) Via Acquire Media NewsEdge) Motor insurance is a "highly dysfunctional market" in which firms' pursuit of profit has led to higher prices for consumers, a report by MPs has said.

In some cases, business practices have not been in the consumer interest and have "inadvertently encouraged criminal activity", the report from the House of Commons Transport Committee said.

There was no clearer example of this than "insurance firms' willingness to pay compensation for whiplash claims which they suspect are fraudulent without requiring the claimant to undergo a medical examination". The committee said steps were being taken to prohibit insurers from offering to settle whiplash claims before the claimant had undergone a medical examination.

"We agree and would like to see this practice banned altogether," the committee said.

The MPs also said they agreed in principle with the Government's requiring of courts to strike out "dishonest" insurance claims where, for example, there had been gross exaggeration.

But the committee cautioned against hasty legislation "because there may be complex legal implications".

The committee also agreed with Government plans to prohibit solicitors from offering inducements, such as cash or tablet computers, to people considering making claims.

The report said progress in enabling insurers and claimant solicitors to share data about potentially fraudulent claims had been slow. The MPs said that when data sharing began it should be compulsory, otherwise only the most reputable firms would be involved.

Launching the report on the controversial issue, the committee's chairman Louise Ellman, Labour MP for Liverpool Riverside, said: "This is our fourth report on the cost of motor insurance and while premiums are now falling, aspects of the market remain dysfunctional and have encouraged criminality to take root." (c) 2014 ProQuest Information and Learning Company; All Rights Reserved.

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