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Story from the RAC Foundation.
Personal injury pay outs seventeen times higher than in some other European countries are forcing up the cost of insurance for drivers, particularly young ones.
Meeting the long-term care costs of some of those catastrophically injured in road accidents can result in compensation payments of around £10 million in the UK, significantly ahead of Germany (£6 million) and France (£6 million).
In Sweden, compensation might be as little as £0.6 million.
The largest factor in the size of a claim is what proportion of the medical and care costs are met by the state, and how much is the responsibility of the injured party – and hence their insurer.
The differences are highlighted in a European-wide comparison of insurance markets for the RAC Foundation by Nick Starling, the former director of general insurance at the Association of British Insurers.
The study argues that the national differences in levels of compensation are likely to increase now that the government has changed the so-called discount rate.
It is likely to result in insurers having to pay much larger up-front lump sums to fund ongoing care for those most badly hurt on the roads. The report says:
“The UK Government’s own calculations for a young quadriplegic requiring £100,000 a year in care costs is that the lump sum award will increase from £5-6 million to £9 million – up around 60%. The UK Prudential Regulation Authority has estimated that overall claims costs could rise by £2 billion annually.”
The biggest burden of the change is likely to be felt by young drivers in terms of increased premiums, because they already pay the highest amount for cover.
To download a copy of the report ”Motor Insurance Premiums for Young Drivers in the UK and Europe”, please click here.
