Surge in bogus whiplash claims sends insurance costs soaring
A RISE in bogus whiplash claims together with a fall in petrol prices is set to drive up the cost of insurance for millions of honest motorists.
There are growing fears that the Government’s efforts to crack down on whiplash fraud appear to have failed, with the number of claims on the rise again.
Meanwhile, cheaper fuel has encouraged motorists to drive more and led to an increase in accidents.
Last night rogue claims management firms were accused of openly flouting rules designed to curb the compensation culture.
One of the UK’s biggest insurance companies warned it will raise premiums in the coming months after seeing a surge in personal injury claims.
Esure, which owns Sheilas’ Wheels and has more than 1.4million UK motor insurance policies, said profits in its motor insurance arm slumped 81 per cent to £3.3million in the first six months of the year. Its shares fell almost 10 per cent.
Chief executive Stuart Vann said it raised average premiums by 5 per cent in the first half of the year to £315 but warned of worse to come.
‘The claims environment in the motor market continues to deteriorate. As a consequence we will seek to implement further rate increases in the second half of the year as we look to mitigate against these trends,’ he said.
Britain has been described by MPs as the whiplash capital of Europe, with bogus claims for neck injuries adding an estimated £93 to every household’s total insurance bill.
The fraud epidemic has been fuelled by controversial ‘no win, no fee’ claims management firms and personal injury lawyers, which bombard potential customers with spam text messages and unsolicited phone calls urging them to claim for a personal
‘Rules are being openly flouted’
injury. In a clampdown the Government capped fees for claims management firms and personal injury lawyers.
It also banned referral fees paid by these firms to insurance companies in exchange for the details of customers involved in an accident. And a panel of independent doctors was set up to assess whiplash injuries.
The measures appeared to be working, with motor i njury claims generated by claims management firms falling for the first time in a decade last year from £354million to £238million.
But the insurance industry says more personal injury claims from motor accidents, including spurious whiplash claims, are being lodged now than before reforms were introduced in 2013.
According to the Association of British Insurers, there were 67,000 fraudulent motor insurance claims last year, up 12 per cent from 2013. This is partly because personal injury lawyers and claims management firms have adapted to the cap on fees by pushing through more claims more efficiently.
But the AA says rogue firms are flouting a ban on cold-calling customers by hiring marketing companies to call for them.
Stephen Gaywood of the AA said: ‘The rules are being openly flouted. These firms are getting hold of data from somewhere and it’s not from insurers.’
The Ministry of Justice last night insisted its reforms ‘have already had a major impact’, adding that the total number of annual whiplash claims has decreased by 70,000 over the past four years.