From e-scooters to new electrical charging technologies, we offer our international experts' predictions on the opportunities and challenges that the motor insurance market may face in the coming year and beyond.
1. Don't expect claimant representatives to exit the low value motor injury claims space any time soon
The impending move to the new Official Injury Claim portal is predicted to increase the proportion of litigants in person. The current economic environment, furloughing, redundancies and mounting financial hardship for many may also cause an upsurge in litigants in person, particularly for motor claims. However, while the indications are that claimants should find the portal easy to use, are claimant solicitors and their business associates really going to give up their RTA income that easily?
2. Changing mobility habits and the regulation of e-scooters will herald an increase in vulnerable road users
Driven by COVID-19 and supported by an increase in cycle lane infrastructure, there has been an increase in the use of personal forms of transport for shorter journeys. With the threat of further periods of lockdown suppressing car usage, we anticipate a significant increase in vulnerable road users and an acceleration in adoption of more environmentally-friendly electrically-powered transportation solutions. This will be echoed in an increase in demand for flexible and on-demand insurance policies. With current e-scooter trials set to conclude in summer 2021, expect to see legislative change to facilitate their wider adoption and likely regulation akin to electrically assisted pedal cycles.
3. Automated vehicles on the road in the UK in 2021
2021 is likely to see the first `automated vehicles' on UK roads for the purpose of the Automated and Electric Vehicles Act 2018 despite widespread industry concerns about the level of advancement and capabilities of the underlying technologies. Driven by the government's unwavering desire for a first use case in the wake of Brexit, expect automated lane keeping systems to be classified as automated, rather than driver assistance systems.
4. Increase in consumer demand for different mobility solutions will lead to new types of vehicle hire and repair claims
The increasing demand for different mobility solutions will require credit hire organisations and representatives tasked with pursuing repair claims to adapt accordingly, presenting new challenges for insurers and lawyers involved in defending these cases. It will be important for compensators to look closely at the need to hire a replacement bicycle, for example. In addition, claims for the total loss of a bicycle may require additional scrutiny and corroboration by an expert engineer. Electric and hybrid vehicle basic hire rate information will also be harder to come by, at least initially. This challenge will however abate as hire companies start to increase their fleets of electric vehicles, and there are more electric vehicles on the road generally.
5. Solar and `vehicle to grid' charging set to be tested in private and commercial vehicles
We will see further testing of new electrical charging technologies in both the private and commercial vehicle markets as people strive to reduce fossil fuel consumption and running costs. Expect to see large commercial vehicle manufacturers trialling the use of solar panel clad trailer units to reduce fuel consumption for plug-in hybrid tractor units. At the same time, manufacturers of electric cars and light commercial vehicles (EVs) are expected to pilot `vehicle to grid' charging in conjunction with energy suppliers. Such novel solutions will help to accelerate the adoption of EVs by enabling consumers to sell energy to the grid at peak times when the vehicle is not being used, and to charge it off peak when energy prices are lower.
6. A ban on dual pricing will challenge the aggregator model
The Financial Conduct Authority's proposed ban on dual pricing for motor and household insurance policies will disrupt the existing price comparison website model and see aggregators continue their moves into non-financial services markets, such as utilities. While renewal prices are likely to fall, there is likely to be a commensurate increase in new customer premiums alongside the general hardening of the market.
7. Brexit and COVID-19 double trouble means continuing uncertainty for overseas claims
Claims volumes are likely to reduce significantly following a spike in litigated claims arising from accidents occurring overseas in late 2019. This has been driven by claimants clamouring to protect their right to bring claims in England and Wales pending an agreement with the EU on issues relating to jurisdiction and enforcement of judgments. At the same time, as the fallout from COVID-19 continues there will be fewer UK-registered cars on foreign roads, although those who choose to travel abroad are more likely to do so by private car rather than use public transport, which may increase the need for European cover.
8. Savings in damages from technology will come
The increasing inclusion of the cost of new, often experimental, technologies within complex injury claims is significantly inflating claims. Environmental assistive technology, exoskeleton and mobility aids generate eye-watering claims. Although the natural reaction is to resist, as little credit is given by claimants for potential cost savings that should follow, ultimately a large proportion of such claims will succeed where there is benefit for the injured person. We predict that although there is short-term claims inflation, focus will shift to highlighting how heads of loss are reduced, led by expert evidence. It is important to balance resistance to the short-term claims inflation from the promotion of new technologies with the pursuit of longer term potential in savings.
9. A Northern Ireland perspective: a new methodology will be introduced in Northern Ireland for determining the discount rate
The Department of Justice for Northern Ireland (DoJ) will introduce a new legal framework for setting the discount rate. At the time of writing, the discount rate remains at the previous level of +2.5%. The DoJ will seek `accelerated passage' of a Bill reforming the framework for setting the discount rate in line with the statutory framework that exists in Scotland. The Scottish personal injury discount rate is currently at -0.75%, higher than the current rate set for England and Wales at -0.25%. It is likely the Bill will be introduced in January or February 2021 with a view to obtaining royal assent by September 2021.
10.A German perspective: fraud will go digital
Until now, sham theft of vehicles or vehicle parts was a worthwhile business for fraudsters. Due to travel restrictions and lockdowns it is now harder for thieves to transport their plunder to eastern Europe. Such offenders are likely to shift their activities to digital fraud. Examples include fictitious policyholders who conclude contracts via online platforms. In the UK we also predict an increase in ghost brokering where policyholders in difficult financial circumstances look for cheaper policies which are too good to be true. We expect those manipulating Google adverts to up their game to capture more business from unsuspecting policyholders who think they are contacting their insurers but are giving their business to fraudsters.
11.A Canadian perspective: arrival of no-fault insurance in British Columbia could increase class actions
The pending arrival of no-fault insurance will have a significant impact on the number of new cases for claimant counsel. As a result, the British Columbian legal industry will see a marked increase in medical malpractice and other class action claims as focus shifts to replace motor vehicle related legal work. According to the Canadian Bar Association's National Class Action Registry, there were 13 new class actions filed in September and October 2020 compared to only four in the same period the previous year.