Some experts in insurance have informed MPs that about 50% of car insurance claims for whiplash injuries are possibly false. This is why the UK has the reputation for probably being the whiplash capital of the world.
When you consider that vehicle insurers receive about 550,000 claims a year for whiplash injuries amounting to around £2 billion that would mean that in the region of £1 billion relates to possible fraudulent claims. This issue has increased significantly since 2007.
Apparently, the average claim is roughly £2,500 with solicitors and claims firms receiving a proportion of these monies when acting for claimants. MPs were informed that the legal and medical tests were inadequate to flush out fraudulent claims and the claim threshold is not high enough. The insurance experts also felt that it was cheaper just to settle a claim rather than contest it.
There are also some fraudsters who are making claims that involve the staging of crashes resulting in claims being falsely submitted for personal damage and injury.
A knock on effect of these possible false claims is that it is estimated that your car insurance premiums along with everybody else’s are suffering because it has the effect of increasing them by an average of £90 per annum.
This information was revealed to the Commons transport select committee by David Powell of the Lloyd’s Insurance Market Association and David Brown of the Institute and Faculty of Actuaries.
The above is obviously a worrying matter for honest car insurance policyholders and it will be interesting to monitor what the insurance industry and the Government are going to do about the situation. Let us hope that a remedy can be found as quickly as possible and, who knows, maybe we will all see a significant drop in our car insurance premiums. After all, a £90 per annum reduction is not to be sneezed at.