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Tough line from NHS pushes up insurance premiums

Insurance premiums are rising as NHS Trusts increasingly pursue guilty drivers for the cost of treating road accident casualties.

NHS Trusts used to be responsible for pursuing their own claims for hospital charges, and in the 1998-99 financial year they recouped £19.6 million.

This figure rose to £67 million in the 2000-2001 tax year, as a result of the cost recovery programme undertaken by the Compensation Recovery Unit set up by the 1999 Road Traffic (NHS Charges) Act.

The same act increased the amount hospitals could recover from the guilty parties in road accidents from £27 per person to £354, with a further opportunity to pursue the cost of in-patient treatment up to a maximum of £10,000.

Rosemarie Spiers, director of Aon Rental Business Services, said the centralised hospital cost collection system is having a direct impact on the cost of insurance claims, which in turn has to be reflected in insurance premiums.

"The new system seems to be functioning much more smoothly, and more claims are being made. It's all adding to third party liability costs which have been going up anyway in terms of personal injury awards and frequency of claims."

In a further inflationary pressure on insurance premiums, the Government has reduced the personal injury multiplier that insurers can apply to compensation payments awarded to provide long-term care to accident victims.

The multiplier effectively represents the interest rate that the recipient of compensation could reasonably expect. By reducing this multiplier to 2.5%, from four to five percent, insurers will have to increase the size of the capital payments they make as compensation, thereby driving up the cost of claims and the cost of premiums.

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