PROPAGANDA MACHINE
It is difficult to get an accurate indication of what’s going on just by watching the media; Noam Chomsky explained it perfectly in his book Media Control: The Spectacular Achievement of Propaganda.
In our industry, the Association of British Insurers is, I believe, the largest propaganda machine. It controls the narrative and works tirelessly to influence public opinion through the media.
In recent years it pushed the line that fraudulent whiplash claims increased premiums, and now I hear constantly from the heads of engineering at insurance companies that they cannot pay body shops retail rates as it, too, will increase premiums.
I find it interesting that most of those who say this have little or no insurance training, or even a holistic understanding of how everything works. What they do have in common is “social conditioning” and they all believe that what they are saying is 100% true.
But I can disprove it with facts.
Group ratings
Firstly, when group ratings are worked out, retail cost is used to calculate repair cost to assign that group rating. The premium is linked to the factor used. Insurance as a contract should be paying out the retail cost of repair irrespective of the insurance product – that is the principle of indemnity and any time an insurer negotiates they are doing so to save money and increase their profits. It is never about reducing premiums.
People will call me anti-insurer, but I can prove what I have just said. The ABI used the media to make whiplash claims an issue. But the English don’t have especially soft necks. There are more whiplash claims in Italy, while the value of whiplash claims in England is R50 000 compared to R66 000 in Switzerland.
I do not dispute that whiplash claims were an issue, but only 1% were found to be fraudulent. That means 99% of whiplash claims were genuine cases.
Despite this, the insurance industry lobbied for change, promising that reforms would reduce premiums in the UK, by R3 000. Then they reduced that to R2 000, then R1 200, and then R770 but they have failed to prove that they delivered these savings to customers.
Benefit
However, insurers themselves have saved around R48 bn as a result of these reforms, according to the Association of Personal Injury Lawyers, none of which has been passed on to consumers.
In fact, premiums went up from 2017 to 2025.
So, if R48 bn savings do not convert to reduced premiums for consumers, they cannot argue that paying retail rates to body shops will increase premiums.
Insurers save millions per year in having their engineers negotiate cost with independent repairers, but based on the above example, there is no evidence that this reduces premiums.
Insurers could pay every independent repairer retail rates on every job and it would not increase a single premium. There is no excuse.
by Tim Kelly
