Car insurance premiums start to rise as fake whiplash claims continue to plague insurers

22nd October 2014

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The cost of car insurance has once again started to rise after more than a year of falling premiums, as whiplash claims remain high.

In the three months to the end of September average premiums rose by 1.2% or £6, to £531 – the first rise since early 2012, figures from the AA have revealed.

The increase has raised concerns that premiums may once again be starting on an upward trajectory, but year-on-year  costs were still 14.4% lower.

Janet Connor, managing director of AA Insurance, said:“Insurers reduced prices in anticipation that the reforms then promised by the Ministry of Justice in its Laspo (Legal Aid, Sentencing and Punishment of Offenders) measures would cut the number of fraudulent and exaggerated personal injury claims – particularly whiplash injury.

“But the truth is, falling premiums had more to do with competitive tension than any benefit afforded by reforms.  Premiums are, on average, now similar to their 2010 level and are no longer economically sustainable.”

The AA said that recent suggests that claims management companies and law firms are finding ways to get around the Laspo measures.

Many insurers have reported a surge in the number of lower-value ‘cash for crash’ claims where a driver deliberately brakes in order to cause a following vehicle to crash into the rear.  The driver then claims from the innocent party’s insurance company for whiplash injury to themselves as well as to passengers, real or fake.

Most claims are successful because diagnosis o, is difficult and relies on the patient’s testimony. Insurers find it difficult to disprove that injury took place and will have to foot the bill for compensation as well as legal costs.  These claims are estimated to add around £90 to the typical cost of a car insurance policy.

In addition, figures released by the ABI last month suggest that in 2013, over 180,000 attempts were made to obtain cheaper cover by providing false information or withholding details such as past convictions.

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