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LASPO loses its lustre

Blog post   •   May 01, 2015 11:38 BST

Like a lot of people in our industry, I had high hopes of LASPO. It was clear that a minority of unscrupulous claimants were manipulating the motor claims system at the expense of the honest majority.

Why should honest drivers, and the industry which safeguards them, hand over millions of pounds every year to dubious personal injury claims?

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 seemed to offer a solution – a clearer, simpler system for everyone.

Making claims cheaper to deal with was a win-win: consumers would see their premiums fall and the industry would be able to reward careful and prudent drivers.

At first, it seemed we were on the right track. Claims fell by nine per cent in the first 12 months after the reforms came into effect.

Sadly, the benefits were short-lived. MOJ stats show that in the last six months of 2014, UK motor claims increased by 12 per cent to 429,276, compared to 383,731 during the same period in 2013.

So what went wrong? There’s been a lot of head-scratching all round, but a consensus is emerging. The consensus is that solicitors took 18 months to remodel their businesses to reflect the new way of working.

Another factor is consolidation of law firms specialising in personal injury claims, reinforcing particular claim patterns and squeezing out the smaller players.

We’re now back to pre-Laspo claim levels and costs are accelerating all round.

For many of us, who have invested a lot of time and energy into helping Laspo work, this is frustrating and disappointing.

The danger is that if this pattern continues, we could see costs being passed on to customers which nobody wants.

So it’s time to think again. What can we do as an industry to reduce our customers’ premiums? There are no easy answers, but if we work together and focus on causes, not symptoms, we’ll find a way to reward our loyal and honest customers.

This blog was written by Graham Gibson, director, Allianz Claims.

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