Government ignore Car Insurance Race penalty

By Tom Jones

The government has recently been consulting on what they have misleadingly labelled ‘whiplash reforms’.  In fact they are an attack on the rights of anyone wherever and however injured, including at work.

What makes the proposals even more underhand is that hidden in the detail is a government concession that they are being proposed without any assessment of their impact on black and minority ethnic groups and they have chosen to ignore new evidence of discrimination in the way car insurance premiums are set.

The government says the reforms are about whiplash, but the proposed 500% increase in the small claims limit from £1,000 to £5,000 will remove the right to free or affordable legal representation for all types of injury – at work or on the road. If your case is worth less than the small claims limit (and 95% of all personal injury cases are) you won’t get any legal costs paid which will leave the vast majority of injured workers and motorists enforcing their right to compensation on their own in their own time or paying for legal advice themselves out of money meant for their losses and their injuries. 

The government casually concedes that it has no data about claimants in seven of the nine characteristics covered by the Equality Act 2010. Incredibly it makes no apologies for the fact that this limits “understanding of the potential equality impacts of the proposals for reform”.

In the rush to help its insurance industry mates, the government has also chosen to ignore a report prepared inAugust by Trevor Phillips, the former chair of the Equality and Human Rights Commission, which found that an ‘ethnic penalty’ is operating in motor insurance.

A report –link below- showed that people who live in areas with a high proportion of ethnic minority people pay up to £458 more for their car insurance.

It is unequivocal in saying that the process of premium setting has produced an inequality of outcome to the detriment of black and minority ethnic groups.  The ABI has dismissed it without even seriously looking into it and the government hasn’t even given it the time of day.

In the USA Airbnb and other organisations have been sued for similar alleged failings.

That the government is ignoring the report at the same time as it proposes radical change raises two significant concerns. 

• Firstly, there is every reason to think these kind of changes are likely to disproportionately disadvantage people from black and minority ethnic communities who suffer an accident, a relatively greater number of whom may have even less chance of managing to achieve a fair settlement against insurers with well-resourced legal departments.
• Secondly, the government is justifying its changes on the grounds insurers will pass on some of the savings they make onto consumers, yet the evidence of the existence of an ethnic penalty in premium-setting suggests that any savings – should they be passed on at all – will reinforce an existing inequality.

So, are the reforms even necessary? Dig behind all the talk of ‘compensation culture’ and ‘fraud’ and you will find that the number of injury claims have gone down and there is no suggestion by anyone of fraud in workplace injury claims yet they are being sneakily included in the changes.  

There is also the small fact that the insurance industry is keeping quiet and again the government is choosing to ignore that their own figures show they have saved nearly £8bn in claims costs in the last five years due to changes already made by the government (and have you noticed your car insurance costs go down?).

Again hidden away the government admits that the changes will cost the Treasury up to £150m and the NHS up to £13m every year – which is a straight loss to you the taxpayer.

The government’s willingness to gloss over the insurers’ failure to not pass on huge savings and it’s casual disregard of tax payers’ money going down the drain comes across as shockingly arrogant but it’s the apparent disinterest in whole sections of the community by choosing not to take the ethnic penalty report seriously and failing to fulfil its legal obligation to ensure that the changes comply with the Equality Act 2010 and don’t disadvantage black and ethnic minority groups that goes into very worrying territory.

Tom Jones, Head of Policy, Thompsons Solicitors

Thompsons Solicitors is working with Operation Black Vote on this issue and urges you to raise it as a matter of urgency with the Secretary of State for Justice, Liz Truss. 

http://www.thompsons.law.co.uk/theethnicpenalty/documents/Ethnic-Penalties.pdf)