July 25, 2011
Official inquiries into allegedly fraudulent personal injury claims arising from car accidents have begun in the UK, following reports that such claims are crippling British insurance providers.
The two separate inquiries were launched in June on the back of insurer’s own attempts to stamp out the behaviour, which is said to be costing industry in the UK more than $1.4 billion per year.
The domestic lobby group is appealing to UK MPs for an overhaul to the system, recommending that government investigate international efforts made to overcome personal injury claims such as whiplash from car accidents. They are also calling for a cap to be applied to fees charged, particularly by specialist claims management companies, which are reportedly "claims farming".
In Australia, our legal system prevents such a situation from taking place, largely because compensation schemes for motor accidents are legislated, and not normally subject to private lawsuits. As a result our car insurance industry is strong by comparison. But the Australian car insurance market is not without its faults – it’s long been an industry dominated by too few players. Two main players – Suncorp Metway and Insurance Australia Group -; with multiple brands each have a major influence on the price of comprehensive car insurance across the board.
But as smaller players increasingly take on the goliaths by offering cut-price premiums on comprehensive car insurance the market is getting a shake-up.
How to slash your premium
The best way to save on your comprehensive car insurance premium is to compare quotes online and look to these smaller players as they have some of the best value deals available. A national car insurance study conducted by RateCity earlier in the year revealed that smaller players such as Bingle, Budget Direct, Virgin Money and Youi all offered substantially lower premiums – as much as 50 percent lower – than those offered by some of the main players.
At the time of the survey Damian Smith, chief executive of RateCity, said the newer players – along with others like Australia Post, Progressive Direct, and Real Insurance – are finally putting some competitive pressure on a market traditionally run by a few main players.
Clearly the best way to save money is to compare car insurance policies, including those from smaller players.
As more brands enter the comprehensive car insurance arena – Coles and Kmart are two more recent additions to the market – competition is set to increase and prices decrease further.
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