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Fake whiplash claims pushing up premiums, say MPs

A car accident where one car has been rear-endedThe government must put a stop to the huge numbers of fraudulent whiplash claims which are driving up the cost of car insurance, say MPs.

A new report from the Transport Select Committee, which is made up of MPs from all parties, says that accident victims should face much tougher tests to prove they are genuinely injured.

Louise Ellman, Transport Committee Chair, said that a rise in the number and value of personal injury claims over recent years was the main reason that premiums had increased at such an alarming rate.

She said: “Many of these claims are for whiplash, an injury where diagnosis is often subjective and therefore very costly for insurers to challenge.

“The threshold for receiving compensation in whiplash cases should be raised and, if the number such claims does not fall significantly, the government should bring forward primary legislation to require objective evidence – both of a whiplash injury and of it having a significant effect on the claimant’s life – before compensation is paid.”

‘Railroaded into taking legal action’

The average price of an annual comprehensive insurance policy today stands at £844, a rise of almost 70 per cent in the past two years, according to Watson Car Price Index.

Ellman added: “Insurers, solicitors and claims management companies have themselves driven up the cost of motor premiums by encouraging people caught up in road accidents they did not cause to claim for personal injury, car hire, and other legal costs.

“Drivers should not be railroaded by cold callers into launching legal action. The insurance industry must abandon sharp practices that push up premiums such as passing drivers’ personal data to other parties or taking secretive referral fees from solicitors, garages and car-hire firms.”

The select committee is calling on minsters to act urgently.

  • It wants the government to review the plans introduced in 2010 to handle low-value personal injury claims online. Critics say that the £1,200 minimum fee for such claims has been set too high.
  • A ministerial committee should be set up to address all the reasons behind soaring premiums.
  • The government should consider a ban on cold-calling accident victims to encourage them to make legal claims.

Insurers’ views

The Association of British Insurers’ director of general insurance Nick Starling said he welcomed the Committee’s report.

“We are pleased that the Transport Select Committee has recognised that spiralling personal injury claims are the real reason car insurance premiums have been increasing and made recommendations for meaningful reform,” he said.

“It is absolutely critical that Britain’s whiplash epidemic is tackled once and for all and the Select Committee’s acknowledgment that the bar to receiving compensation for whiplash is too low is a step in the right direction.

“The Committee is also right that the fees lawyers receive need to be reviewed as they currently add unnecessary cost.

“Every motorist wants the best deal and insurers are determined to deliver value for money motor insurance. Our customers are fed up of getting text messages, fed up of the compensation culture and have had enough of paying higher car insurance premiums to line the pockets of ambulance-chasing lawyers and claims-management companies.”

Starling told BBC Radio that the current system meant that insurers found it almost impossible to challenge accident victims. He said: “The problem is that if someone presents themselves with a medical certificate saying they’ve got whiplash, then an insurance company would have to prove that they didn’t, and that’s an extremely difficult thing to do.”