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MPs launch new investigation into whiplash claims to see if insurance premiums can be reduced

Industry News : 15 March 2013

A new investigation focused on cutting the number of whiplash claims to reduce car insurance premiums is being launched by MPs. The Transport Committee is requesting evidence on how the whiplash costs, which currently add £90 to each car insurance premium, can be reduced.

However, the committee has been criticised for launching its investigation whilst a previous government inquiry into whiplash is about to be published.

Britain has been described by the Transport Committee as "the whiplash capital of the world", and seeks to establish what proportion of costs result from people faking their injuries. MPs will also examine the impact that clamping down on exaggerated claims could have on victims of car accidents with genuine injuries.

Insurers currently face a compensation bill of £2bn due to the rising number of  whiplash claims which currently stand at around 550,000 a year, or 1,500 a day. The insurers argue that a great deal of the money – up to £2,500 per whiplash claim – is wasted on payments to claims management companies and legal fees.

According to the Association of British Insurers (ABI), Britain's whiplash industry is increasing the cost of the average motor insurance policy by a 20%.  Whiplash claims soared by 70% between 2005 and 2010, despite road traffic accidents falling by 23%.

Chair of the Transport Committee, Louise Ellman, said: "It is vitally important for policymakers to understand the reasons for the very high cost of motor insurance, especially for young drivers, and to take steps to bring that cost down. Whiplash claims undoubtedly play a part in driving up the cost of motor insurance, but access to justice for injured people must be preserved."

However Simon Douglas, director of AA Insurance, questioned the timing of the Transport Committee's investigation, which comes at a time when a previous government inquiry into whiplash has ended. Douglas stated; "It seems odd that it has taken a year to announce this inquiry, at a time when a separate Justice Ministry inquiry appears to have covered similar ground.

"While there is clearly a need to bring the escalating number of often-spurious claims under control, there are steps that could usefully help – for example, fixed rates of compensation and a proportion of claims payment withheld and paid direct for treatment, such as physiotherapy. Similarly, historic claims should reflect the cost of treatment that sufferers have, or should have, undertaken."

The AA favours the system used in Germany and Austria, where collisions below a certain speed are deemed to be too low to result in whiplash injury. Currently around 70% of road accident personal injury claims in the UK are for whiplash, compared with 47% in Germany.

Earlier this week, insurers called for those making whiplash claims to be forced to undergo medical examinations by independently-appointed experts to cure the UK's "whiplash epidemic”. The ABI wants all whiplash cases to be dealt with by medical professionals who have been accredited by a special board in order to curb the flow of claims.

The organisation added that anyone whose whiplash claim is found to be even slightly exaggerated should automatically have their entire case thrown out.

Assistant Director of motor and liability for the ABI, James Dalton, said: "Whiplash has come to mean 'whipcash' for too many people, with all motorists paying the price through higher motor premiums. Our 'have a go' compensation culture makes whiplash the fraud of choice for too many. Our proposals to curb the UK's whiplash epidemic will ensure that claimants are independently assessed, compensation paid to genuine claimants more quickly, and deter anyone who thinks that claiming whiplash is free money waiting to be collected."

The Transport Committee will be looking at whether the government could be taking further action in order to reduce the cost of car insurance and will be accepting written submissions until 15th April 2013.