4th July 2014
Insurers have warned the government’s proposal to ban the settlement of whiplash claims without proper medical examination would drive up the cost of car insurance for motorists.
MPs on the cross-party transport committee said enforcing medical examinations after car accidents would limit the number of fraudulent claims made. According to the Association of British Insurers, the number of dishonest motor claims hit 59,000 last year – up 34% on the year before – and cost £811 million.
Transport committee chair Louise Ellman said: ‘The government must prohibit insurers from setting whiplash claims before the claimant has undergone a medical examination.’
However, LV= car insurance claims director Martin Milliner said while the MPs suggestion was ‘admirable’ it was also ‘completely out of touch with what behaviours are operating in the personal injury market place today’.
‘Such a suggestion would in fact drive up costs and therefore premiums and give even more power to claimant lawyers in what is already an imbalanced process,’ he said. ‘On this point, the transport committee has failed to understand why insurers are compelled to in some cases settle on a pre-med basis in order to keep the overall cost of insurance down.’
Milliner blamed the rise of the claims management industry for pushing car accident victims to make claims and subsequently pushing up the cost of motor insurance for all.
‘Despite the number of car accidents falling in the past five years, claims for whiplash type personal injuries have increased significantly,’ he said. ‘This growth has been fuelled by a relentless claims management industry that has cold-called crash victims persistently, offering them iPads and cash payments upfront to encourage them to make a claim.’
Instead of banning early settlement of claims, Milliner said the government should look at limiting the time a claimant has to undergo an examination following an accident, which he said would ‘reduce spurious claims and deter fraudsters’.
‘The present system where a claimant has up to three years after the event to make a claim means that medical evaluation has little or no value so long after the event,’ he said.
He also welcomed proposals to stop medical professionals producing evaluations on behalf of personal injury firms and claims management companies.
‘Practitioners face a clear conflict of interest when producing a report for a claimant that has a vested financial interest in the outcome,’ said Milliner.
The transport committee has said it will also look at increasing the small claims limit from £1,000. Milliner said the average claim cost is £4,500 ‘and it is high time the limit was increased accordingly’.
By increasing the limit legal fees associated with paying personal injury claims would be reduced ‘and bring down the overall cost of insurance’.