Car Premiums Rise 40% as Parasitic Claims Fleece U.K. Grandmas

On a cold January evening last year, Sandy Van Litsenborgh was driving home from work on an icy side street in Whitechapel , east London. Unable to pass an oncoming motorist because the street was too narrow, she reversed to let the car past and hit a Vauxhall Vectra parked behind her.

“I was doing less than 5 miles an hour,” said Van Litsenborgh, a 54 year-old administrator at the nearby Royal London Hospital . “There wasn’t a scratch on my car. There was a scratch on his car not even an inch long. It wasn’t even dented.” She says she sought out the owner in a nearby shop and passed on her insurance details.

Four months later, lawyers acting on behalf of the Vectra’s owner filed a claim for damages totaling 22,000 pounds ($36,000), saying the car was severely damaged and four passengers were suffering from whiplash injuries. Van Litsenborgh’s insurance premium rose by 70 percent.

The U.K. system creates clear losers -- customers who this year pay average premiums 40 percent higher than in 2010, and car insurance companies, who’ve shelled out more than they take in for 15 consecutive years as personal injury claims soared. Winners include lawyers, vehicle repairers, car hire firms, doctors and even the police, who benefit from a “merry-go- round” of referral fees, according to a House of Commons committee report in March.

“It’s a parasitic system,” said Martin Milliner, director of claims at Liverpool Victoria Friendly Society Ltd. , the U.K.’s third largest car insurer. “It increases the opportunity for fraud, malpractice and the more worrying trend of where that fraud money goes,” including organized crime.

U.K. motor insurers paid 10.8 billion pounds in claims in 2009, the latest year for which figures are available, according to the Association of British Insurers , the industry lobby group. As claims rose 20 percent from 2005, the number of accidents involving injuries dropped by 18 percent to about 164,000 in the same period.

Higher costs have forced insurers to raise prices. Britons now pay about 900 pounds a year for comprehensive cover, according to the Automobile Association Ltd. ’s Shoparound Index, which tracks the cheapest quotes offered by insurers. Even so, insurers haven’t made an underwriting profit from motor policies since 1996.

The British government says the country risks creating a “compensation culture” and has pledged changes to “prevent expensive and unnecessary litigation” which result in greater payments to lawyers than to claimants.

Hastings car insurance fee waved back! [hastings direct ...

Now i think this is a 'biggy' , he says modestly! Had my car insurance through 'hastings direct' paying monthly,into second year -8 months, and am scrapping car and not replacing for a while. rang to cancel and told of c ￡52 'exit fee' .baulked at this and asked why,answer approx '' well we take a loan out on your behalf and so on early exit of term a settlement fee has to paid,this is on your t+c's '' to get to point i rang consumer direct,who did'nt know anything about this and thought the figure excessive.rang 4 other companies and yes it is industry standard but 'hastings' seemed easily dearest. rang back and spoke to supervisor and started mentioning 'mse' and it's 'readership'- the pleasent young guy was sympathetic, and a subscriber ! he spoke to his manager,who wouldn't come to the phone, who AUTHORISED THE ENTIRE PAYMENT DROPPED ! okay this shows the power of a] persistnce etc and b] ditto mentioning 'mse' and its 1 MILLION subsciber alone. Reply:okay- so why DID they renege/refund then if as you say they are 'in the right'? indeed it is in the 't+c's'- does that make the charge justifable in your eyes? something you havn't commented on 'astaroth'- perhaps you still work for this kind of organisation and have been ' brainwashed , if you're honest with yourself ?

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