AA Insurance agrees that further legislation is needed to curb the continuing rise in the number of fraudulent or exaggerated whiplash injury claims
The Transport Committee has published a new report (its fourth) on the cost of motor insurance in which it reviews the Government’s plans to tackle fraudulent and exaggerated motor insurance claims, particularly for whiplash injuries.
Louise Ellman MP, Chair of the Transport Committee said “This is our fourth report on the cost of motor insurance and while premiums are now falling, aspects of the market remain dysfunctional and have encouraged criminality to take root.
“The Government must prohibit insurers from settling whiplash claims before the claimant has undergone a medical examination.
“Action is required to prevent abuses arising from Alternative Business Structures that allow solicitors to commission medical reports on whiplash and other soft tissue injuries from medical experts who are not genuinely independent.
“Solicitors must be banned from generating more work by offering inducements, such as cash or tablet computers, to encourage people to make a claim."
AA Insurance agrees with the committee that further legislation is needed to curb the continuing rise in the number of people who attempt to make fraudulent or exaggerated whiplash injury claims.
Despite reforms already introduced, the number and cost of personal injury claims, particularly whiplash, is increasing even though the number of crashes and injuries on Britain's roads continues to fall.* This suggests that attempts at fraud are still rising, while insurers are even starting to see claims for psychological injury following even very minor collisions.
Insurers are working hard to identify attempts at fraud and are becoming increasingly successful, as figures released earlier this year underlined** but more can be done.
Greater court powers and better data sharing between insurers will help, as will better controls to ensure solicitors don’t pursue false or exaggerated claims.
The new independent medical panel – which will have to be funded by the insurance industry – to assess whether a whiplash injury has occurred may also help to weed out ‘chancers’ who might not be prepared to undergo such an examination.
Given that it is extremely difficult to accurately diagnose soft tissue damage it’s vital that the medical examination takes into account all of the circumstances of a collision, such as speed and direction of impact and damage caused to the vehicles involved, to confirm the likelihood or otherwise of injury. The panel’s decisions must also be binding on the claimant.
At present, insurers often pay small whiplash injury claims (ie below £5,000) brought against their policyholders because under the present system, the cost of attempting to prove that injury did not take place is considerably greater and has very little chance of success.
The AA would also like to see most of the compensation settlements for whiplash injury go directly to pay bills for physiotherapy or other medical treatment rather than to the claimant.
Car insurance premiums have been falling*** and figures to be released by the AA later this month are expected to show that this trend has continued, albeit at a slower rate.
Premium falls have largely been credited to Justice Ministry reforms and while this has certainly been extremely beneficial, it is competitive pressure that is now keeping them down.
Premiums are expected to start rising again later this year or early in 2015. It’s vital that the Transport Committee’s report is quickly converted into effective legislation to ensure that insurer claims costs and thus premium rises are kept in check.
It’s high time that insurance companies are no longer regarded as a ‘soft touch’
Simon Douglas, director of AA Insurance
Simon Douglas, director of AA Insurance comments, “It’s high time that insurance companies are no longer regarded as a ‘soft touch’ to obtain a few thousand pounds for an injury that doesn’t justify such payment or indeed, for no injury at all and I hope that the courts come down heavily on such attempts at fraud.”
(4 July 2014)
* Department for Transport statistics, June 2014: car passenger casualties dropped 8% to 109,787 (2013) from 119,708 (2012) and down 32% from 160,667 (2009)
** The Association of British Insurers announced on 30 May that the number attempts at insurance fraud detected have increased by 18% over the past year.
*** At the end of the first quarter of 2012, the AA’s British Insurance Premium Index reported that the average quote for a comprehensive car insurance policy had fallen by 16.6%; and the average quote for a combined buildings and contents policy has fallen by 8.4%; over the previous 12 months