Motor insurance brokers could lose up to 50% of their claims revenue due to the 2021 whiplash rules.
Since May 31st 2021, government reforms now limit the amount of compensation drivers can claim from minor tissue injuries in car accidents.
This could have a huge impact for motor insurance brokers, as it may affect the service their customers receive from outsourced legal partners and the revenue previously delivered by your FNOL provider.
The impact of the reforms on brokers
Most motor insurance brokers in the UK outsource their legal services, vehicle replacement and claims handling, meaning claims revenue is generated and shared via a preferred outsourced partner, providing a full claims FNOL capability.
Previously, a large proportion of outsourced providers relied heavily on legal services income to supplement the cost of claims handling. The changes means that the legal services income will dramatically reduce, which in turn will impact broker claims revenue.
What can brokers do?
The most important factor to consider regarding the whiplash reforms is the customer experience, and how to ensure customers still receive an excellent level of care and attention after an accident, despite the changes.
Now that the reforms are in place, customers have the option to negotiate their own whiplash compensation claims directly with the at-fault party’s insurance company. It is imperative that brokers are aware of the potential drop in claims ratio and revenue if their policyholders choose the direct path to the at-fault insurer. If this happens, in addition to losing control of the customer claim, they may also lose the policyholder when it comes to renewal.
Considering the changes and the uncertain impact, brokers are now looking to market and benchmark against their current arrangements. They are looking for a partner who can continue to provide a seamless claims handling service, in full, including - but not limited to - the management of small whiplash claims. This will help them continue to deliver an excellent service to their customers and also protect a perceived reduction in renewal rates.
Don't get left in the dark - download our whitepaper
The changes around whiplash rules have been on the cards for some time, but brokers have received mixed messages about how the reforms could impact their customer service and bottom line.
We have published a whitepaper, Whiplash reform: What does it mean for the broker market? To help brokers develop a fuller understanding of the whiplash reforms and how the changes could impact them.
In the whitepaper, we discuss what the reforms entail, the full implications for brokers and how to navigate the challenges presented.