The release of the latest AA British Insurance Premium Index has cast a very interesting light on Scotland and in particular the Glasgow region and surrounding G postcodes. As the blight of fraudulent personal injury claims continues to hit the insurance market it is motorists in and around the Glasgow region that seem to be hardest hit.
The AA index offers a priceless insight into insurance premium trends right across the UK. So, what does the latest release show about insurance premiums in Scotland and the impact of personal injury claims?
Personal Injury Claims
Before we look at the difference in premiums across Scotland, and also compare them to other areas of the UK, it is worth noting that it is not only fraudulent personal injury claims which push premiums higher but also valid injury claims. This comes at a time when overall personal injury claims in Scotland increased by 16.6% over the last four years compared to a fall of 4.5% in England over the same period. These figures are contained in a report by Scottish law firm DWF which has recently set up an antifraud unit specifically for the Scottish market.
The personal injury claims regulatory structure in Scotland is set to change in November and we will cover the main aspects of this later in the article.
Motor Insurance Premiums In Scotland
The AA index shows that those living in Glasgow are paying up to twice the level of premiums for car insurance compared to other parts of the country. It is estimated that the average annual motoring insurance premium for those with a G postcode is around £592. When you bear in mind the premium for those living in the Kirkwall area of Scotland is just £304 a year this perfectly illustrates the impact of both valid and fraudulent personal injury claims (as well as general crime rates).
Many will also be surprised to learn that the average motoring insurance premium across Edinburgh and EH postcodes is around £434 a year, much less than Glasgow. When you compare average motoring insurance premiums in Edinburgh to the cost of living and that in Glasgow, there do seem to be some anomalies. While it may be a little unfair to highlight the premium for motorists in Kirkwall, which is indeed the second cheapest area in the UK, this does highlight another unique element of the Scottish legal system.
Scottish Legal System
Some may argue we are comparing apples and pears when looking at motoring insurance premiums in England and those in Scotland. The main difference is that the Scottish legal system governing personal injury claims, which moves from a voluntary system to a statutory system in November 2016, makes it more difficult to follow through with false claims. The fact that insurance premiums for different areas of Scotland are specifically calculated using claim size and frequency for that individual area is also slightly different from the system in England. This is not the only variation across the Scottish legal system as there are some more anomalies in other areas of legal activity.
So, if you live in a specific area of Scotland where crime levels are relatively high then it is more likely you will pay a larger insurance premium for your motor vehicle. On the flipside of the coin, those who live in rural Scotland where crime is often negligible will enjoy low insurance premiums for their vehicles. The more generalised system across England is perhaps more recognised by motorists but many would argue that the Scottish system, which benefits and penalises specific areas on their particular personal injury claims activity, is fairer?
Legal Changes In Scotland
As we touched on above, November 2016 will see a more formal framework introduced in relation to negotiating personal injury claims in Scottish courts. This will replace an agreement from 2006 which was wholly voluntary and non-binding. The idea is that the new legislation will set out an array of steps which parties must take before raising proceedings for the courts. The hope is that this will see a significant reduction in the number of litigation claims where agreement cannot be reached which clogs up the courts and increases overall costs.
One of the major changes will be a new power for the courts which will allow them to award costs against a party which has failed to follow the protocol or given an unreasonable argument for not accepting a settlement offer. The threshold for personal injury claims to be heard in local sheriff courts and the Scotland Personal Injury Court will be increased from the previous voluntary figure of £10,000 to £25,000. Relatively small cases which do make it to litigation will attract greater cost awards but the forecast reduction in actual claims reaching the courts will reduce the overall figure.
Personal Injury Claims In Scotland
There are a number of anomalies when comparing the Scottish and English legal systems, some of which relate to personal injury claims as detailed above. The previous voluntary framework agreed back in 2006 will soon be placed on a more formal footing thereby reducing the number of cases which reach the courts – although there will be an increase in individual cost awards for smaller claims. This should help to address the recent increase in personal injury claims across Scotland at a time when similar claims in England have been falling.