Why Ministers' Plans to Strangle Fraud Epidemic Will Not Be Enough; ANALYSIS

The Mail on Sunday (London, England), June 10, 2012 | Go to article overview

Why Ministers' Plans to Strangle Fraud Epidemic Will Not Be Enough; ANALYSIS


Byline: ADAM LUCK THE REPORTER WHO FIRST EXPOSED THE SCANDAL IN LIVE MAGAZINE

FED-UP with paying ever more astronomical premiums, irate drivers would have been reassured by the Office of Fair Trading's decision this month to brand the motor insurance industry 'dysfunctional'.

Their investigation revealed what we felt we already knew - that drivers are being charged millions extra a year (about [pounds sterling]225million, in fact) by insurers and garages ramping up accident claims - and the OFT has threatened a Competition Commission investigation.

But far from being cowed, the motor insurance industry has welcomed the prospect, pointing the finger at others for inflating our premiums.

Its confidence is well-founded. Not only have insurers increased our premiums with impunity, they have managed to keep the Government onside.

In February, Transport Secretary Justine Greening supported The Mail on Sunday's campaign to end the whiplash scam, combat bogus claims and decrease premiums.

It began last year when The Mail on Sunday revealed that the average premium had increased from [pounds sterling]333 to [pounds sterling]1,510 in the space of less than 20 years. And it prompted one of the biggest ever responses from MoS readers livid over inflated premiums and the erosion of a basic sense of fairness.

The Government has since announced a series of legal reforms designed to deter the motor insurance merry-goround. From next year, it will ban referral fees, which sees garages, insurance companies, claims management companies (CMCs), lawyers, hospitals and police all profiting at our expense. These fees oil the wheels of the entire scam.

The Government also promised a raft of measures to strip out costs from the system, so driving them down for insurers in the hope these savings will be passed on to motorists. But what Mrs Greening's advisers have failed to realise is that the ban on fees may not work, because the CMCs can work around it.

They and insurers have been allowed to set up their own legal arms, or to buy up existing firms. …

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