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Law360, London (March 12, 2021, 2:00 PM GMT ) The number of motor insurance claims paid out by insurers fell by a fifth last year because fewer cars were on Britain's roads during the lockdowns ordered by the government, according to figures from an industry trade body.
The Association of British Insurers said that 2.1 million motor claims were settled in 2020, a drop of 19% from the 2.6 million paid out on in 2019. The fall was a result of fewer accidents on the roads, a consequence of government orders to stay at home during the COVID-19 lockdowns and avoid unnecessary travel.
"The pandemic has forced many motorists to change their driving habits," Laura Hughes, the association's manager for general insurance, said. "Predictably, lockdowns have led to far fewer vehicles on the roads, reflected in the fall in the number of motor claims."
According to Department for Transport statistics released in February, levels of motor traffic plunged by 30% in the first six months of last year compared with the first half of 2019.
But the ABI said that the cost of claims to insurers had not fallen in line with a decline in the number of claims. Payouts to motor insurance claimants were down just 6% from the previous year at £8.3 billion ($11.5 billion) in 2020, slightly down from £8.8 billion in 2019.
This was due to a rise in the average cost of a personal injury claim, from £3,400 in 2019 to £4,000 last year.
The rise in personal injury costs for insurers has been a major factor behind policy price hikes in recent years, which have in turn comes under political scrutiny. The Civil Liability Act was passed in 2018 as the government sought to tackle what it called a "rampant compensation culture," particularly for motor-related personal injury claims such as "whiplash" injuries to the neck.
Those reforms will be introduced in May, after being delayed four times; the government hopes that insurers will pass on savings to customers of £35 off their annual premiums.
Hughes said on Thursday that the new rules should reduce costs for the sector.
"With the average personal injury claim rising last year, the advent of the whiplash claims portal in May should help control whiplash costs while ensuring that proportionate compensation is paid to genuinely injured claimants," she added.
--Editing by Ed Harris.
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