With no coach, no robes, no Duke of Edinburgh – and no majority Government – this was a very different Queen’s Speech. Although Brexit and national security were among its critical themes in a Parliamentary session that has been extended to last for two years rather than one, three Bills directly relevant to the general insurance sector were announced.
Whiplash reform is back on the legislative agenda via the Civil Liability Bill, which probably means we can expect an accompanying increase to the small claims limit for injury cases. The detail is not clear, but this Bill suggests that the reform package announced in 2015 and relaunched earlier this year is very much back on track. The Queen referred in terms to legislation “to help reduce motor insurance premiums”, with savings of £35 per policy quoted by Government.
A separate Bill will mean regulation of claims management companies is to be beefed up and transferred to the Financial Conduct Authority, which could see a welcome reduction to cold calling and spam texting about accident claims, aspects which have strong cross-sector support.
Insurance arrangements for automated driving will be addressed by the Automated and Electric Vehicles Bill. The principles will be as understood pre-election, being that the motor insurer meets claims in automated mode but gets rights to recover against the vehicle manufacturer. This is a really sensible approach that allows for quick resolution where people are hurt and provides a mechanism for insurers and manufacturers to apportion operating risks appropriately.
While these measures will be welcomed by the insurance sector, there was absolutely no direct reference to the personal injury discount rate. That is about calculating compensation for very serious injuries and the reduction of the discount rate in March this year has caused real upward pressure on insurance and reinsurance premiums.
But since changing the discount rate needs legislation, perhaps the new post-election minority Government thought that spelling out anything on this now was just too politically sensitive? Maybe so, but a very quick consultation in April & May has created a level of expectation of change that has not been clearly answered by the Queen’s Speech, although it should be noted that the briefing pack for the Civil Liability Bill refers to ensuring “a fair, transparent and proportionate system of compensation”. That language certainly looks flexible enough, in Whitehall terms, to cover measures to change the discount rate.
Unless and until there is further clarity here, I expect to see heavy lobbying by insurers to put (or keep) this topic back at the top of the policy agenda.