Will whipping whiplash get us cheaper car cover?

A change in the way whiplash claims are handled could see car insurance premiums cut by as much as £60 per year, according to one of the UK’s leading insurers.

Aviva is proposing changes to the motor insurance personal injury claims system in a bid to cut the excessive costs that have seen policy prices rise by as much as 80% in the last five years.

Its report, ‘Road to Reform: Reducing Motor Premiums by Reforming the Personal Injury Claims Process’, coincides with the Ministry of Justice Whiplash Consultation, which closes on March 8, 2013. It outlines how an estimated £1.5billion could be chopped from UK premiums by simply cutting out third party claims handlers.

Cutting out the middleman

It’s estimated that around 70% of the 825,000 motoring personal injury claims filed each year are whiplash related and that they are costing the industry around £2billion every year – a cost that is then passed on to innocent motorists.

Under the current system of referral fees,  costs can spiral out of control. Payments are made to breakdown recovery firms, brokers and even the insurers themselves by ‘middleman’ claims management firms and lawyers in exchange for information on accident victims.

The government has already laid down its own proposals to do away with these referral fees but Aviva suggests that the whole system needs a complete overhaul to cut out the middlemen completely.

Central to Aviva’s proposals is the idea that personal injury claimants should contact the ‘at fault’ insurer directly as opposed to being referred to intermediaries such as personal injury and claims management lawyers.

It is believed that this alone would halve the cost of a claim and save the industry an estimated £1.5billion a year – a saving that could be passed on to motorists, to the tune of a £60 reduction in the cost of an annual motor insurance premium.

Care not cash

The report also advocates the use of an independent panel of medical experts to examine whiplash claims and recommends rehabilitation over cash being paid out as compensation.

It is hoped this targeted approach to rehabilitation would not only be better for the injured party but could also deter bogus claimants who are simply looking to generate a cash pay-out.

Aviva carried out a study of over 2,000 motorists and found that almost two-thirds (63%) believe people seek compensation to get money to spend on things other than their rehabilitation.

This view is supported by Aviva’s polling of around 400 drivers, which revealed that only one-third (33%) of drivers who had made a personal injury claim actually use compensation money for physiotherapy or medical treatment – household debts and holidays were among some of the other things on which people spent their claim cash.

What do you think of the Aviva proposals? Let us know by tweeting us @MoneySuperMkt with the hashtag #WhippingWhiplash

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