Tighter rules and better data needed on whiplash claims

• Fourth Report of Session 2013-14: Cost of motor insurance: whiplash
• Fourth Report of Session 2013-14: Cost of motor insurance: whiplash (PDF 1.65 MB)
• Inquiry: Cost of motor insurance: whiplash
• Transport Committee

Launching the report by the Transport Select Committee, the Chair Louise Ellman MP, said:

"Whiplash injuries can have debilitating consequences for those who suffer them. However, some of the increase in whiplash claims will have been due to fraud or exaggeration. 

To help bring insurance premiums down the Government must tighten up the requirements for motor insurance claims and ensure that insurers honour their commitment to reduce premiums. 

The Government should consider requiring claimants to provide proof that they have either been seen by a doctor or attended A&E shortly after the accident. There should be a presumption against accepting claims where adequate proof of injury is not provided."

The Committee was surprised to hear that insurers will sometimes make an offer to personal injury claimants even before a medical report has been received. The MPs also note that their previous recommendation on making the links between insurers and other parties involved with claims more transparent has been ignored.

Fraudulent activity and exaggeration

Insurers must immediately get their house in order and end practices which encourage fraud and exaggeration, the report warns. If not, the Government should take steps to protect motorists.

Committee Chair Louise Ellman MP, said:

"Motor insurers have committed to passing any reductions in costs arising from legal reforms to consumers in the form of lower premiums. We recommend that the Government explain how it will monitor that this commitment is honoured."

The number of fraudulent and exaggerated whiplash claims has contributed to the increase in motor insurance premiums in recent years. Estimates of the percentage of fraudulent claims ranged from 0.1% to over 60%, according to the report. These estimates were based on firms' caseloads, statistical extrapolations or survey data.

Forms of fraudulent activity mentioned by witnesses included 'cash-for-crash', where crashes were caused deliberately to generate claims; claims relating to non-existent passengers; fabricated or exaggerated symptoms; or exaggeration of the impact of a genuine injury. 

Absence of statistics

The absence of comprehensive statistics about road traffic accidents means that it is impossible to relate the increasing number of personal injury claims in recent years to the number of accidents. The Government needs to look at how to improve the collection of data about road accidents, according to the MPs, so that it can improve the detection of fraudulent personal injury claims and help highways authorities improve road safety by targeting spending on accident black-spots.

Committee Chair, Louise Ellman MP, said:

"The Government has claimed that the UK is the 'whiplash capital of the world', but without reliable data on road accidents we cannot say whether that statement is true or not."

Accreditation scheme

The Committee supports the proposal for an accreditation scheme for medical practitioners who provide medical reports in relation to whiplash claims. It is essential that the practitioners instructed to prepare such reports are provided with information about the accident and the claimant's medical records. Reports prepared without this information are likely to be of very limited value.

Louise Ellman MP, added:

"We were concerned to hear suggestions from insurers, that medical reports routinely overstate the likely duration of whiplash symptoms. If true, this is evidence of systemic exaggeration of claims. A random audit of medical reports should be conducted each year to identify poor practice and improve standards."

Small claims court

The MPs warn that access to justice could be impaired by Government proposals to switch whiplash claims between £1,000 and £5,000 to the small claims court, particularly for people who do not feel confident to represent themselves against insurers who will use legal professionals to contest claims.

The use of the small claims track could also prove counterproductive in efforts to discourage fraudulent and exaggerated claims as expert evidence is not generally submitted.

The Ministry of Justice should consider ways in which use of the small claims track could be combined with the routine submission of expert evidence, such as medical reports, to restrict opportunities for fraud and exaggeration. It should also consider ways in which litigants in person could be assisted to use the small claims process, to address the inequality of arms likely to arise in personal injury claims.

Conclusion

Louise Ellman MP, concluded:

"Many claims are genuine and relate to real injuries which can affect people for months or years. In the debate about how to reduce fraud and exaggeration, genuine claimants should not be demonised simply because their condition cannot be picked up on a scan."

The report points out that there are many factors which contribute to the cost of motor insurance including the activities of claims management companies, the poor safety record of young drivers and competition issues now under investigation by the Competition Commission.

The report reiterates the Committee's previous recommendation for more effective cross-departmental co-ordination of work to reduce premiums.

Further information

• About Parliament: Select committees
• Visiting Parliament: Watch committees