Source · Select Committees · Justice Committee
Recommendation 9
9
Accepted in Part
Ensure transparency for whiplash reform savings assessment and publish insurer submissions
Recommendation
We note the requirement in the Civil Liability Act 2018 for HM Treasury to report to Parliament in the 2024–25 financial year on the extent to which savings have been passed on to policyholders. Whilst we acknowledge that many factors may impact on the cost of motor insurance premiums, it is vital that the direct effect of the whiplash reforms is properly assessed. We recommend that the Government ensures this process is as transparent as possible, including publication of the submissions made by insurers. Given the whiplash reforms are still bedding in, and the large number of cases still awaiting settlement, we further recommend that the Government conduct a follow-up assessment one year after the publication of its planned review. (Paragraph 50) 20 Whiplash reform and the Official njury Claim Service
Government Response Summary
The MoJ agrees that transparency is important for the statutory savings report and will work with HMT and the FCA, considering commercial sensitivities. However, regarding a follow-up assessment, they deem it too early to commit, stating they will continue to discuss it as the work on the savings report progresses.
Government Response
Accepted in Part
HM Government
Accepted in Part
MoJ agree that transparency is important regarding the production of the statutory savings report and will work with HMT and the FCA in this regard, taking due notice of commercial sensitivity of the data collected. We will continue to liaise with HMT and the FCA in relation to whether to conduct a follow-up assessment one year after the publication of the review report. Whilst there is no statutory requirement to complete a follow-up exercise we do not disagree with the suggestion. We would though caution that it is too early to make such a commitment. We will, however, continue to discuss this point with HMT and FCA as their work on the savings report progresses. Civil Liability Act 2018: Part 3 of the CLA 2018 requires insurance companies who sell motor policies in England and Wales to provide the Financial Conduct Authority (FCA) with data and information to enable a thorough review of the impact of Parts 1 and 2 of the CLA 2018 on insurance policy holders. Following the completion of the FCA’s review, the provisions in the CLA 2018 also require HM Treasury (HMT) to lay a report in Parliament by no later than 1 April 2025 on savings achieved and how these have been applied to motor insurance policies. MoJ has liaised directly with HMT and the FCA and work is ongoing regarding the evidence gathering phase of this process. A template has been prepared and distributed to relevant insurance companies. The information provided in response, via this template, will be considered by the FCA and they will then work with HMT to produce a report which will be laid before Parliament. We agree with the Committee that it would be difficult to determine the extent to which economic upward pressures have been offset by any savings arising from CLA 2018 reforms. We also agree that this work should be completed in as transparent a way as is possible. However, we do note that full transparency may be affected by the need to protect commercially sensitive data supplied to the FCA for assessment by insurance companies. Next steps: HMT are already working closely with the FCA in respect of the completion of the required statutory savings report. MoJ will continue to liaise with HMT and the FCA and will provide advice and support as necessary as this work moves forward. We also note the recommendation that the Government conduct a follow-up assessment one year after the publication of its planned review. Whilst there is no statutory requirement to complete a follow up exercise we do not disagree with the suggestion. We would, though caution that it is too early to make such a commitment. We will, however, continue to discuss this point with HMT and FCA as their work on the savings report progresses.