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Your Legal Friend comments on the House of Commons Transport Committee’s report into cost of motor insurance: whiplash

Road accident claims
24th September 2013

We welcome the Transport Committee’s report, which finally brings some clarity to an issue that up until now has been dominated by one sided insurance company spin. The report acknowledges that whiplash can be a debilitating condition and that genuine claimants must not be demonised.

We wholeheartedly support the tightening of the rules, and have called for the introduction of independent medical checks in all cases, which would go a long way to tackle fraudulent claims. This would stop the insurance industry practice, which ‘surprised the committee’ of offering compensation to a claimant in advance of any evidence being provided. 

We were also pleased to see the true figures on whiplash cases published.  The insurance industry has been talking about the rise in claims, using out of date figures. The report acknowledges the reality: that the number of whiplash claims has fallen over the past year and continues to decline. The data provided in the report also dispels the myth of the whiplash growth- but does evidence an increase in bodily injury claims as a result of road traffic accidents.  It also points to an increased awareness of consumer rights to claim using ‘no win- no fee’ as ‘not necessarily being a bad thing’, and indicates that it could be evidence of people exercising their legal rights when it comes to RTA cases. 

The committee cautions against raising the lower limit for whiplash claims to £5,000, and we support this stance. Implementing this change would see over 85% of currently legitimate claims unfairly excluded. A fairer approach would be to apply a relevant inflationary adjustment to the £1,000 limit. Our suggestion is to raise the limit to between £1600-1750 using a Compound average rate increase of RPI from the last agreement.

There is a real possibility that if the claims limit increases, victims will choose to represent themselves, and become involved in a ‘David v Goliath’ style battle as they take on the might of an insurance company’s professional legal team. There is a risk of ‘under settlement’ in this process in favour of the insurer as the report alludes to. With the additional cost burden of handling Litigant In Person cases, the already over stretched small claims court and Ministry of Justice will struggle with the overwhelming demands of litigants in person and the associated costs that come with it. 

The insurance industry has a responsibility to the victims and we are pleased that the Transport Select Committee was critical of the links between insurers and other claims parties. There is a greater need for transparency which cannot be ignored and we hope that procedures can bring these issues to the fore.  The Committee was also critical of the fact the insurance industry summit ‘did not include the legal profession’ in the debate. 

Innocent victims of road traffic accidents must not be affected by the hyperbole and exaggeration of the insurance industry facts and we support the Committee’s assertion that ‘insurers need to get their house in better order’. We would welcome joint involvement in the creation of a data sharing model that deals with fraudulent claims, thereby driving the cost of premiums down further. We urge the government to follow the committee’s recommendations and not be swayed by emotive language and hyperbole which could adversely affect genuine claimants and Access to Justice.”