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MPs Blame Whiplash For The Rising Cost of Car Insurance Premiums

Car Insurance Cost

A select group of cross party MPs , the Transport Select Committee, have been reviewing the rising costs of buying car insurance and have come down heavily on Whiplash claims as the major contributing factor.

The Committee has published its Twelfth Report of Session 2010–12, Cost of motor insurance: follow up (HC 1451) and you can download the full report from the committee’s website.

The Report criticises the ease of claim for an ‘unprovable condition’ and points out the wide proportional disparity between the rising number of claims and the number of car accidents.

Number of Claims

2000-05 average 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
395,735 466,097 518,821 551,905 625,072 674,997 790,999

Number of casualties in road accidents

2000-04 average 2005 2006 2007 2008 2009 2010
301,529 271,017 258,404 247,780 230,905 222,146 208,648

Conditional Fee arrangements also known as  ‘no win, no fee’ arrangements are blamed for this increase.

The committee points out that while many claims are genuine there is a lot of evidence that proves fraudulent claims such as ‘cash for crash’ staged accident scams .

The genuineness of claims for whiplash injuries, is hotly contested by the committee. Around 70% of car insurance personal injury claims arise from whiplash injuries to which there is often no objective proof of the injury. The committee propose to ask Parliament to change the law both for claims for whiplash and to make changes to the claim referral fees system.

Regarding Whiplash claims the report states:-

Where someone can demonstrate that they have suffered an injury, including whiplash, as a result of a road traffic accident for which they were not fully liable they should be able to claim and receive compensation.

However, in relation to whiplash, we are not convinced that a diagnosis unsupported by any further evidence of injury or personal inconvenience arising from the injury should be sufficient for a claim to be settled. In our view, the bar to receiving compensation in whiplash cases should be raised. If this were possible by means of an insurer taking a case to court and establishing new case law we suspect this would already have happened.

We note the Government’s argument that its legal reforms should reduce the money in the system and encourage insurers to defend claims more vigorously. If the number of whiplash claims does not fall significantly once these changes are implemented there would in our view be a strong case to consider primary legislation to require objective evidence of a whiplash injury, or of the injury having a significant effect on the claimant’s life, before compensation was paid.

Car Insurance Blog welcomes the changes proposed which should alleviate the pressure on the mounting claims reseverves that must be held by each car insurer to deal with future losses. However in return the British car buying public will expect to see much cheaper car insurance and the savings  not going to shareholders!

Otherwise the Governements exercise will have been pointless!

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