Are Fraudulent Whiplash Claims A Problem?
- AuthorJohn Hall
We have been regaled by headlines in such august publications as The Sun, The Mail and The Express which refer to an epidemic of fraudulent whiplash claims in road traffic cases. If the headlines are to be believed it would seem that the country is full of people manufacturing injuries in respect of fabricated accidents.
What Is The Truth?
The ABI (Association of British Insurers) alleges that 7% of whiplash claims are fraudulent. Even if that figure was correct it would mean that 93% of claims were authentic ie. the overwhelming number of claims that are made arising out of road traffic accidents.
However even this mythical 7% figure is incapable of substantiation by the insurers. Whenever they are requested to corroborate this figure they respond that the information is ‘commercially sensitive’. The reason for their reticence is that this is simply a figure that they suspect is true. The actual figure for proven fraud claims is a paltry 0.05%.
What Does The Government Propose?
In order to eradicate a non-existent problem in RTA cases the government proposes to increase the small claims limit to a minimum of £5,000 in relation to all personal injury claims. If they succeed then this would effectively prevent any injury victim with a claim that does not exceed this figure from being able to secure legal representation.
It is ironic that only a matter of two years ago the government ruled out increasing the small claims limit because it accepted that there were no adequate safeguards to protect genuine claimants. So far as I am aware there are no plans by the government to introduce any safeguards so you might wonder why the change of mind?
Not being content with simply increasing the small claims limit the government also proposes to either remove an injured victim’s entitlement to compensation altogether in relation to what it classes as ‘minor’ road traffic accident related soft tissue injury claims or alternatively to reduce the amount that an injured person can recover in relation to such claims to £400. To rub salt in the wound, if there is a psychological element to the injury, a whopping £25 will be added to the claim.
Effectively the government wishes to restrict access to justice in relation to victims of ‘minor’ injuries and to do away with compensation altogether for certain categories of soft tissue injuries.
To put this proposal into perspective, whilst the government considers it is appropriate to award train passengers £2 per minute for delays, it is proposing to either remove any right to compensation for minor whiplash claims or alternatively restrict recovery to £2 per day.
Why Is There A Need For This Legislation?
That is a very good question. Since 2010 the value of personal injury claims has fallen by 30% resulting in an £8.73bn windfall to the insurers. Despite this windfall the same insurers have been cynically penalising loyal customers by automatically increasing their premiums when they come up for renewal.
Because of the competitive market in relation to such insurance the insurers have had to lower their premiums to attract new customers whilst at the same time penalising their existing customers by increasing their premiums. Would you trust any organisation that treats loyalty in such a cavalier manner?
In the light of overwhelming evidence that there does not appear to be a significant problem with fraudulent RTA claims, it is difficult to understand why the Government is so keen to press ahead with these proposals.
Is it any coincidence that insurance companies provide sizeable donations to the Tory party? Surely not!