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Insurance companies encouraging fraud - says MPs' committee

A committee of MPs has accused insurance companies of encouraging people to make fraudulent claims and to exaggerate their injuries in accident claims.

The Transport Select Committee called on insurance companies to “put their house in order” as part of a report looking into the financial impact of whiplash injury claims on the costs of car insurance. Amongst the accusations levelled by the committee at insurance companies were that they often accepted whiplash injury claims without proper scrutiny, in some cases paying out even when they suspected a claim may be fraudulent, or before they had seen any medical evidence of the claimants injuries.

In further comments made in their report, the committee said that by accepting suspect claims, "the industry as a whole is damaged, and motorists pick up the bill in the form of higher premiums". Insurers were also criticised for ignoring previous recommendations to come clean about any links they have with claims management companies.

Decline in whiplash claims

The amount of road accident claims involving whiplash has fallen over the past two years, from 567,000 claims in 2010/11 to 477,000 claims in 2012/13. According to figures from the Association of British Insurers, 78% of low value road accident claims involved people who had suffered whiplash-type injuries, a figure which the ABI has said makes Britain the “whiplash capital of Europe”.

Several changes where recommended by the Transport Select Committee to reduce the number of fraudulent motor accident claims and the impact that these claims have on other drivers’ insurance premiums. These changes include a requirement that proof of a whiplash injury is provided by a doctor, that doctors providing medical reports on whiplash injuries and other road accident injuries should be members of an accredited scheme and that their medical reports should be regularly audited to ensure they are of a consistently high standard.

The MP’s also recommended that better data on the number of fraudulent claims be kept and that the length of time someone has after an accident to make an injury claim should be reduced from the current 3 years to 1 year.

Ian Troop, a road accident solicitor at Canter Levin & Berg, who has dealt with many legitimate claimants who have suffered whiplash-type injuries in road accidents through no fault of their own added his thoughts on the matter, saying:

'As a road traffic accident solicitor, I know from my clients that whiplash is a very real injury, both painful and debilitating. The Transport Select Committee have recognised this, seeking to preserve the right of injured people to obtain compensation though proper legal representation.

Solicitors firms are often accused by the insurance industry of encouraging fraudulent or exaggerated claims however as this report from the Committee has shown, it is in fact the insurers themselves who are doing this, by failing to properly scrutinize claims or insist on medical evidence of injury.'

By Ian Troop