The government is keen to reduce the cost of insurance premiums and is working with insurers to slash the £2billion annual cost of whiplash claims – which adds £90 to the cost of a typical motor policy.
Whiplash claimants will now face tougher medical scrutiny by independent doctors rather than their own GP.
Whiplash – no medical evidence?
Insurers are convinced the overwhelming majority of whiplash claims have no medical basis, arguing that the number of claims has increased dramatically as a direct result of activity by claims management companies. These firms thrived by paying referral fees to insurance companies and accident repair facilities for the names of people involved in accidents, then contacting them by phone and text to encourage them to make a claim.
The Government has outlawed referral fees – and insurers have been slammed for accepting fees while complaining about the whiplash epidemic. But claims managers continue to tout for business, often contacting people at random on the off-chance they have been involved in a car crash. If they win a claim, the firms syphon off up to 25% of the award.
Many solicitors also specialise in whiplash cases, working on a no-win, no-fee basis to stimulate the number of claimants.
Justine Greening MP, Secretary of State for Transport, who hosted a recent crisis summit with representatives of the insurance industry, said: “There is no one silver bullet for tackling fraudulent whiplash claims but we have already taken decisive action by banning referral fees, reforming no-win no-fee rules and cracking down on fraud.
“This latest summit shows we continue to work closely with the insurance industry and consumer groups to tackle the compensation culture and find more ways of bringing down the cost of insurance premiums. Building on what we have already achieved together, we are doing everything possible to drive down the cost of motor insurance and by the end of the year, when we and the industry have completed further work, we will be able to bring forward yet more proposals to do this."
Insurers also blame staged motor accidents – where one car brakes sharply to cause a collision with an innocent motorist following behind, usually at a roundabout – for forcing up premiums. The police have identified ‘cash for crash’ blackspots in London, Liverpool, Manchester, Bolton, Blackburn, Oldham and Birmingham.
Following such an incident, a claim is typically filed against the innocent motorist’s insurance policy by four or five individuals in the front car – each of whom will complain of debilitating whiplash – even though the accident occurred at low speed. In Germany, which suffered its own surge in whiplash claims in the 1990s, the courts will not consider claims for whiplash if the speed of the car involved was less than 10km per hour (6mph).
Motorists in such blackspots also suffer higher premiums because insurers take postcodes into account when setting premiums.
One of the main problems with whiplash from the insurers’ perspective – and that of honest motorists – is that it does not display physical symptoms. This means it is extremely difficult to disprove someone’s claim that they are suffering severe neck and back pain.
Doctors have been criticised for diagnosing whiplash too readily. In Germany, two separate doctors must confirm the existence of whiplash for a claim to proceed.
Evidence for the dubious nature of whiplash claims is compelling:
- The number of car accidents has fallen by 23% in the past five years but the number of whiplash claims has risen by 70%.
- Whiplash accounts for 75% of all personal injury claims. In France the figure is 3%.
Despite improvements in car safety features such as crumple zones and headrests, there are 1,500 whiplash claims in the UK every day – more than any other European country.
What’s more, it is often cheaper for insurers to settle whiplash claims out of court than to carry the cost of a legal case. Knowing this, fraudsters submit claims knowing that they will probably not need to offer much proof of injury.
Access cheap insurance
Clare Francis, head of content at MoneySupermarket said: “We fully support the government’s move to tighten the rules around whiplash injury claims from car accidents. Exaggerated whiplash claims on even the most minor of incidents have contributed to an unprecedented hike in premiums over the last few years. This clampdown is a step in the right direction for motorists who want to keep the cost of motoring down. We hope to see changes implemented quickly and efficiently but, until then, it is vital drivers shop around for the best deal and make their hard-earned cash go further."
You can access cheap car insurance from the UK’s leading providers by visiting MoneySupermarket’s dedicated car insurance channel.
Black box solution
Justine Greening is also an advocate of the use of ‘black box’ telematics devices within cars as a way to reduce the cost of insurance, especially for younger drivers. The box records the speed, braking and other driving patterns of the car. She said: “We will work with industry to take full advantage of the use of telematics, to give young people a greater choice of options if they want to drive.”
Mike Brockman of telematics specialist insurethebox says telematics can help identify suspect claims: “This technology makes it possible to identify the sort of low-speed low-impact incident where fraud is more likely to be prevalent.”
All drivers can benefit from the use of telematics if the data collected shows they are safe drivers and therefore less likely to be involved in an accident. Insurers using the system will adjust premiums month by month to reflect the driver’s performance. You can find out more about how telematics could save you money on your car insurance by reading Les Roberts’ article, Cut car insurance costs with better driving.
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