NHS drives up cost of car insurance

Efficient new collection system is increasing premiums

The National Health Service (NHS) is pushing up the cost of motor insurance, because of new rules which allow it to claw back treatment costs from motor insurers more efficiently.

At the end of the day, it is the paying public that has to foot the bill. It is a very efficient way of taxing people

Trevor Harrison, Motor Insurers' Bureau

According to new figures from the Department of Health, the NHS claimed back £75.8m from motor insurers between 2000 and 2001.

If it keeps to its current collection rate this financial year, it will be on track to claim back about £90m - between April and July 2001 alone it collected £29.9m.

The figures back up insurers' claims that premiums are rising due to NHS fees.

On average, comprehensive insurance has risen by 39% over the past two years, and non-comprehensive insurance by 64% according to the Automobile Association's (AA) British Insurance Premium Index.

Trevor Harrison, technical claims manager at the Motor Insurers' Bureau, said: "Any increased payments made will affect premiums.

"At the end of the day it is the paying public that has to foot the bill. It is a very efficient way of taxing people."

Rising costs

Although motor insurers have been liable for the costs of NHS treatment for a number of years, it "lost millions of pounds under the old arrangements" because the system was too bureaucratic.

Under the Road Traffic (NHS charges) Act 1999, the NHS can recover charges from the negligent driver's insurer.

The new scheme also means that for the first time the NHS has been able to recover the cost for treatment given following accidents involving uninsured or untraceable drivers - adding to the burden on motor premiums.

Rising fees

A dedicated NHS unit claims back costs

After the legislative changes, the NHS set up a dedicated unit to deal with road traffic accidents with the aim of collecting £100m a year for the NHS.

Each time there is an accident, a motor insurer is legally obliged to inform the NHS, which will determine if it is liable for any costs.

Under the old system, the NHS could claim a flat-rate fee of £21.30 for emergency treatment, but under the new system it can claim much more - £354.

The NHS can also recover the costs of hospital admissions. Insurers are charged £435 per day with a maximum charge of £10,000 in any one case.

The Social Security Recovery of Benefits Act 1997 also makes insurers liable for costs relating to permanent damage caused by motor accidents.

In practise, this means that the Department for Work and Pensions can recover the cost of providing certain benefits to people, where the need for these services has been caused by a road traffic accident.

Malcolm Tarling, spokesman for the Association of British Insurers' (ABI) said: "This is one of a number of factors that has increased premium rates.

"However, there are also others such as legal expenses of compensation for claims on personal injury and property, along with insurance premium tax which are adding to premiums."