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Government to tighten medical checks on whiplash claims Independent medical panels will review whiplash insurance claims to ensure only genuine cases receive payouts, justice secretary Chris Grayling has announced The change, to take effect next year, was included in a package of government measures to reduce the costs of running a car. Fraudulent whiplash claims, in which people lie about or exaggerate the medical consequences of car accidents, have helped drive up the cost of motor insurance premiums. According to insurers, false claims cost them more than £2bn in payouts and lead to an average premium increase of £90 for drivers. Each whiplash compensation payout costs an average of £2,400 insurers say, with an additional £2,000 in legal costs. Grayling said it was not right that people who cheat the insurance system get away with it while forcing up the price for everyone else. “So we are now going after whiplash fraudsters and will keep on driving premiums down,” he said. The government said it would work quickly with experts to set up independent medical panels. This will include a scheme for accrediting medical experts who can assess whiplash injuries, as well as measures to enhance the reporting process and carry out spot checks. For more on this story, visit bit.ly/1gI5qKO
Solvency II to take effect at start of 2016 The European Commission has announced that it will postpone the application date of the Solvency II Directive to 1 January 2016 The Commission said it was not possible to publish Omnibus II, the legislation underpinning the regulations, before 1 January 2014, the date when Solvency II is currently scheduled to start to apply. The European Parliament, Council and Commission’s failure to agree the legislation had caused repeated delays. But Commissioner Michel Barnier said an agreement between the parties was now “within reach”. He said: “I have always wanted rapid implementation of Solvency II. But the currently planned date is simply no longer tenable. “We have therefore proposed this postponement in order to avoid any legal uncertainty, especially for undertakings and supervisory authorities; we have done this only after obtaining assurance from the Council and the Parliament that they would not further change this new application date of Solvency II.” Insurance Europe said it appreciated the clarity provided by the European Commission but warned it left insurers with little time to prepare. Director general Michaela Koller said: “The timetable will be very challenging for insurers and supervisors and will likely lead to a significant increase in costs for the industry in preparing for and complying with the new regime.” For more on this story, visit bit.ly/1bAukXe
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Whitehall seeks LGPS advice Actuarial firms have been invited to bid for work advising the government on how to secure ‘vital’ administrative savings in the management of town hall pensions. Successful bidders would be expected to have experience of pension fund management and to provide a robust cost-benefit analysis on when the potential savings could be delivered across 89 different Local Government Pension Scheme fund administrators. bit.ly/17gRjby
PRA consults on Solvency II The Prudential Regulation Authority is seeking views on how it plans to implement and interpret European Solvency II regulations and what it expects insurance firms to do to prepare. “Many of the guidelines represent good practice in conformity with existing rules and should not present an additional burden for firms,” the PRA said. Its consultation closes on November 15. bit.ly/1a9qTc9
Private firms to maintain public pension rights Contractors who take over public services will be required to continue offering public sector pensions to transferring staff, the Treasury has announced. The government has updated its Fair Deal guidance, which since 1999 has mandated that staff outsourced from government be offered private pension schemes “broadly comparable” to those they used to pay into in the public sector. bit.ly/16veHS1
High Court ruling clears way for TPR action on pension liberation fraud A High Court judge has ruled the legal status of nine so-called liberation vehicles are ‘occupational pension schemes’ paving the way for The Pensions Regulator (TPR) to take action. Andrew Warwick-Thompson, TPR’s executive director for defined contribution, welcomed the legal clarity provided by the ruling. He said: “This means that a number of powers are available to [TPR] in respect of such schemes, and the market should not doubt we will continue to take action against schemes where there is evidence of misuse of members’ pots.” Pensions liberation allows people to access a portion of their pension or lump sum before the age of 55. However, some practices are fraudulent, keeping people ignorant of the fees involved and tax consequences. In May, police carried out a series of raids on organisations accused of involvement in liberation schemes. Subsequently, the High Court was asked to determine the legal status of these schemes. For more on this story, visit bit.ly/1acU4ao
‘Brave up’ to higher autoenrolment contributions The 8% contribution benchmark for autoenrolment pensions is not enough to deliver a decent retirement income and there is a need to “brave up” up to pushing it higher, the National Association of Pension Funds chief executive has argued. Addressing the NAPF’s annual conference in Manchester in October, Joanne Segars said the 8% contribution rate was a good place to start but it needed to increase by up to seven percentage points to ensure life in retirement was adequate. “There aren’t many of us who think that the 8% contribution is enough to deliver a decent pension,” Segars told delegates. “Now we are going to have to brave up to this issue, as 12% or 15% are more commonly seen as being the right kinds of benchmarks.” However, her comments drew criticism from the CBI. Neil Carberry, director of employment and skills at the business lobby, said: “The Pensions Commission chose 8% for a reason. Any suggestion of a change, just a year into the roll-out and before the vast majority of firms are involved at all, is deeply misguided. State mandated minimum contributions must be affordable for all companies and workers.” For more on this story, visit bit.ly/H426JN
THE ACTUARY • November 2013 www.theactuary.com
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