It’s a little known fact that – along with answering telephones under other people’s names and sorting things out when people drive their vehicles into stuff, Bankstone also has a specialist consulting division providing next-level counsel on bafflingly complicated issues to discerning consumers of Jedi-class insight.
In a world grown weary of experts, of course, Bankstone Consulting Group occasionally has some time on its hands. In one such recent idle moment, the BCG team ran some numbers to test the validity of HMG’s repeated insistence that the Civil Liability Act will save motorists an average £35 per head per annum – always assuming, as we surely can, that insurers pass on the savings they’ll make from the abolition of whiplash, trifling insurance claims etc.
BCG’s disturbing conclusion is that the net effect of the CLA may not be precisely as your government has represented it. Far be it from Bankstone News to question the word of Mrs May and her team (assuming it’s still her when you read this). We’re simply reporting what we’ve been told by BCG chief consultant Diphthong Python. And, frankly, he’ll question anything. Or anyone, for that matter. Mad Dog Python, they call him.
From what we could make of the bewildering blather of stats he recently sprayed us with, the flaw in HMG’s assumptions is as follows. Only around 30% of motoring individuals in the UK currently purchase legal expenses policies, for which they typically pay around thirty quid. This modest level of take-up stems from most motorists’ expectation that if they get pranged up and need a lawyer, they can hire one on a no-win-no-fee basis.
But that won’t happen once we’re into the brave new world of CLA. Why? Because 95% of personal injury claims won’t top the £5k small claims limit, so there’ll be no fee there to be had. So, unless you’re planning to pay your own legal fees or represent yourself, or some such nonsense, you’ll need a legal expenses policy from now on. In future, in other words, we’ll all need leg-ex policies.
If you’re already one of those prudent belt-and-braces types who likes to purchase a legal expenses policy – or routinely gets talked into it by some persuasive person with a commission to earn – you’ll be staring down the barrel of a £15 price hike.
Why? (Must you keep asking that?) Because the price of legal expenses policies is currently subsidised by income from personal injury claims – income that won’t be there in a post-CLA universe in which small PI claims will magically transform into uninsured loss claims by dint of their failing to clear the £5k limit.
The net effect will be as follows:
Current leg-ex customers (30% of motorists) will pay £15 more per annum
New leg-ex customers (70% of motorists) will pay £45 (more) per annum
You do the maths – or use one of those new-fangled difference engine thingies to do it for you – and that means the average motorist will be paying £36 pounds more a year.
Ergo, the net impact of CLA will be a £1 increase in motorists’ insurance costs. It’s almost as though our government a) hasn’t thought things through, or b) isn’t really enacting CLA for the benefit of decent ordinary law-abiding UK motorists.
Surely that can’t be right, you’re probably thinking. Coincidentally, that’s what most BCG clients say when presented with one of their so-called ‘reports’. But what if – on the analogy of the famous stopped clock – just this once, the BGC boffins were actually on to something.
Steep in that, Folks.
What sort of a world would that mean we were living in?!
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