50 Predictions: Motor
Published 1 September 2015
Making predictions about the future of the insurance market is not for the faint-hearted. Our experts have boldly looked ahead at the challenges you may face over the next year and produced 50 focused predictions.
Autonomous cars will herald a change of gear in assessment of risk in motor claims
With driverless car pilots now under way, risk will need to be assessed differently, with greater emphasis on the vehicle. Fully autonomous cars will help to reduce significantly the frequency and severity of accidents as the potential for human error is removed. But, like all technology, it will sometimes fail. When it does, it might be the product liability insurer of the vehicle or system manufacturer receiving the claim, not the motor insurer. Collaboration between insurers and vehicle and system manufacturers is also likely to grow as the vast amounts of data the car will be processing will be valuable to both claims and underwriting teams. Associated cyber risks should not be underestimated, from rerouting multiple vehicles and causing traffic chaos to using the vehicle as a weapon.
Government reforms will promote independence and quality in whiplash reporting
The government’s whiplash reform programme is yet to be fully implemented but there is cause for optimism that it will help restore confidence in medical reporting. The reforms regulate those who can prepare the report and their fees, and prevent solicitors from instructing medical reporting organisations or experts with whom they have a direct financial link. This goes some way to promoting independence in reporting. However, to weed out unmeritorious claims on a mass scale and improve quality in reporting, the system of accreditation (due to be implemented on 1 January 2016) will need to use management information to identify persistent non-compliance and/or underperformance and impose robust sanctions, and MedCo must be prepared to show its teeth where necessary.
Clampdown needed on fraud when applying for insurance
The Insurance Fraud Taskforce must now find ways to educate consumers that insurance fraud is not a victimless crime. Set up by HM Treasury to investigate the causes of insurance fraud and to recommend solutions for implementation, the Taskforce’s interim report has already identified as a key issue a perception among some that it is acceptable to misrepresent facts at the point of quote. It is only when insurance fraud is viewed in a similar vein to benefit fraud that peer pressure will help to alleviate the problem and thereby protect the interests of honest consumers and lower claims.
Credit hire rate review may see insurers exit the GTA
The Association of British Insurers’ General Terms of Agreement (GTA) annual rate review may see some existing subscribers exit the industry agreement unless the rate changes reflect the current state of the law and the market. In the recent Court of Appeal decision in Stevens v Equity Syndicate Management Ltd it was held that the rate awarded to a non-impecunious claimant should be the “lowest reasonable rate quoted by a mainstream supplier”. While traditionally there has been a small increase in GTA rates each year, following this decision there is pressure for the rates to go down.