C4 Dispatches vs. Motor Insurers: Who won this round?

Financial Services Team Blog

Lynn Tweedale

The recent Channel 4 Dispatches programme looking into car claims has certainly set the cat amongst the Insurance provider pigeons.  A half hour name-calling campaign seemingly targeted at Direct Line ‘revealed’ that “major insurers cash in when you have a crash, through maximising profits, lucrative referral fees and rebate deals, sometimes at the expense of doing what’s best for you and your car.”

Whilst, as researchers, we recoiled in horror at the statistics being banded about as ‘significant’ (based on only 67 respondents), the rest of the population are, no doubt, in horror at how their pride and joy will be returned to them should they be unfortunate enough to need to claim.

It seems perfect business sense to me to send as much work as possible in the direction of a single garage network in order for bulk discounts – it’s textbook economics.  And insurers seek to maximise their profits?  Goodness – no?!  How dare they?  But at the expense of quality – I do understand that argument, and Direct Line, The ABI and Ageas have all spoken out to reject these latter claims of detriment to customers.

However, we’re fully aware that premiums are increasing exponentially and something doesn’t seem to make sense if repair costs are being reduced – by whichever tactic insurers see fit.

Motor insurers claim increasing premiums are due to the rising costs of settling personal injury claims, insurance fraud and uninsured driving.  LV= estimates fraudulent injury claims add £100 per year to the average motor insurance, The Association of British Insurers (ABI) estimates undetected motor insurance claims adds another £50, whilst confused.com estimates uninsured motorists add another £30 on honest customers. At an average of £180 per year in unwanted ‘extras’, this still doesn’t explain how my car insurance nearly doubled this year alone…and it’s not because of the gender directive as it was pre-December and I received a cheaper quote elsewhere.

The only thing that will put this quarrel to rest is the long needed competition commission report prompted by the Office of Fair Trading due in just under 2 year’s time.

But in the meantime, linger on the positives of the car insurance industry and the reassurance insurance provides to customers.  I certainly welcome the knowledge my insurer will take care of the repair – and that they will take care of me with some of the best customer service scores I’ve seen.  At least the proof of this IS statistically evident – The General Insurance Market Research Association (GIMRA) and Harris recently won the Market Research Society award for Financial Services for standing up and doing something about it, showing dedication to improving the experience of motor and home insurance claimants: http://www.harrisinteractive.com/uk/NewsRoom/NewsReleases/tabid/563/ctl/ReadCustom%20Default/mid/1790/ArticleId/1129/Default.aspx

I’d say my clients should all give themselves a well deserved pat on the back.