Clamp Down on Whiplash Claims
20 July 2017
A couple of weeks ago, I put together a blog about the intended crackdown on fake holiday sickness claims. As it would turn out, this is not the only bogus insurance claims that are being specifically targeted for a clamp down. During the Queen’s Speech this year, it was announced that fraudulent or exaggerated injury claims (such as whiplash) will also be subject to more stringent checks.
It was confirmed that the oversight of "claims management" companies would be brought under the Financial Conduct Authority in a streamlining and tightening of regulation. The new Civil Liability Bill would introduce new rules regarding medical evidence submitted with claims and set a new fixed rate of compensation for whiplash injury claimants. The Bill will ensure that genuine claimants get paid fairly and exaggerated claims will be reduced.
Whiplash is the most common personal injury claim in the UK. More than 1,500 whiplash claims are made in the UK every day, costing the insurance industry an eye-watering £2 billion every year. These figures have led to the UK being labeled the “whiplash capital of Europe.” Between 2006 and 2013, there was a 60% increase in motoring-related personal injury claims. According to the Association of British Insurers, eight in every ten personal injury claims are now for whiplash.
The Civil Liability Bill will ban offers to settle claims without the support of medical evidence and introduce a new fixed tariff of compensation for whiplash injuries lasting up to two years.
These insurance battles also add around £90 to the average annual car insurance premium. Personal injury claims – and the legal fees that accompany them – are continually rising in the UK. The increasing cost of this to insurers is, ultimately, passed on to consumers. It is speculated that this new ruling will reduce the average car insurance premium by approximately £35 per year.
However, there was no specific reference made to reforming the Ogden rate, the discount rate applied to personal injury claims. But the savings from this measure are anticipated to mitigate some of the recent increases brought about by changes to the Ogden rate.
Despite this new legislation being brought forth during the Queen’s Speech as part of the government agenda, the law is yet to pass through parliament by a majority vote. Moreover, the increase in the small claims limit for road traffic issues may still be increased from £1,000 to £5,000 as of October next year. The limit for all other personal injury claims will be increased from £1,000 to £2,000.
The insurance industry does face challenging times. The number of false or exaggerated claims – across a variety of issues – seems to have reached epidemic proportions. The recent spate of holiday illness claims will also no doubt result in parliamentary legislation in the future.
Has your company been discussing this crackdown on whiplash claims? Will these claims change the way you provide insurance? I’d love to chat with you about the markets and see what I can do to help your business. Click here to see my details.
Written By Stuart McKenna