Fraudulent Whiplash Claims Blamed For High Motor Insurance Premiums
MP’s accuse the insurance industry and calls for reforms to the claims process
MP’s on the Transport Select Committee have accused the insurance industry of ‘encouraging fraud and exaggerating claims’. An increase in claim costs for whiplash has caused premiums for motorists to soar. (Although in April 2013 a reduction in motor premiums was reported, compared to the same period last year.)
Whilst the insurance industry denied that is was responsible for encouraging fraud, it admitted that the claims process needed reform.
The accusations came in a report which suggested that a lack of scrutiny in such claims has led to an escalation of whiplash claims. (In the UK 78% of low value motor personal injury claims are for whiplash, compared with an average of 48% in the rest of Europe, according to the Association of British Insurers (ABI))
Compensation for whiplash is often paid without the necessity of a Policyholder confirming or providing evidence of injury (either via a GP or hospital).
The ABI reports that whiplash now costs motorists on average £90 per premium (a total cost to UK motorists in excess of £2billion a year.)
Dishonest motorists claiming compensation inflates claim costs but it can be argued that the referral of claims to lawyers encourages the submission of fraudulent claims. Although referral fees for the same were made illegal in April.
MP’s have recommended the following actions by the insurance industry to improve the claims culture of motorists:
- That proof of whiplash should be provided by a doctor.
- Introduction of an accredited scheme for practitioners who provide medical reports and that routine audits are undertaken to ensure injuries/claims are not exaggerated.
- Better data on fraudulent claims should be made available by Insurers.
- The period for claims window to be made should be reduced to one year.
Sources: Association of British Insurers