Under current ‘industry standards’, as soon as a claim is raised insurance companies treat both sides as the guilty parties. An ongoing claim has to be notified both to potential insurers when taking out a policy, and no-claims-bonus is lost on existing policies, until the claim is settled in full. This costs customers on both sides significant amounts of money which is only repaid to the innocent party when the claim is settled in full, potentially months or years later.

I am campaigning for a change in practice - enshrined in law - that treats both parties as ‘innocent’ until the claim is settled, at which point the ‘guilty’ party (possibly both) suffers the increase in premiums and loss of no claims that the insurance companies would like to charge to both up front.

Insurance companies are guilty of trying to both have their cake and eat it. The current ‘industry standard’ ensures that it is beneficial to extend the eventual settlement of the claim as far into the future as possible. The insurance companies on both sides benefit from both the delay in payout and the increase in immediate income, providing them with capital that is not theirs to invest. This has a highly negative effect on their customers, who feel that such practices deserve to be countered by increasing claim values.

Changing the law to prevent this practice would result in claims being settled more quickly and more equitably. Insurance companies would benefit as they would no longer be viewed as money-grabbing, immoral corporations but beneficial institutions that provide a public service, as indeed they were once so viewed, and fraudulent claims would be reduced.

Let me give you a couple of personal examples:

I was recently knocked off my motorcycle and run over 2 weeks before my car insurance renewal date. I had already paid my car renewal premium, but my insurance company increased my renewal premium by more than £100. The other party’s insurers have admitted, in writing, full liability for the accident, but my insurers will not refund the increase in premium until the claim is settled in full. This will take many months as my injuries will take time to heal and, until my future prognosis is known, the claim cannot be assessed. I am told that I will eventually be refunded when the claim is settled, but until then ALL my motor insurance policies have increased premiums. Not to put too fine a point on it, insurance companies are making profit out of my money, and of course they won’t pay any interest on it. Some might call this stealing.

Example 2. My son was driving his car when a parcel-van pulled out in front of him. His car was written off. The other side (a well known parcel company) refused to admit liability for months. As my son was insured 3-rd party fire and theft only, he could not replace his car until liability was admitted, and so hired a vehicle to continue his life. Eventually the other side admitted liability and paid the value of the car, but the car hire fees (around £1000) are still disputed. The accident was more than 3 years ago. In the intervening period, all my son’s insurance premiums have been loaded because of an ‘unsettled claim’. It is unlikely that he will recover all his costs, despite being an innocent party to someone else’s mistake. There is no incentive for either side’s insurance companies to settle; while the claim is open both sides make money with no eventual downside.

I think this practice is immoral. However insurance companies exist to make money for their shareholders, and without legislation to ensure that they behave properly they will continue to rip us all off. Support my petition for a change that benefits the people, rather than the corporations.