Car insurance companies have been suffering over the past 12 months from an increasing number of false whiplash claims and other dubious falsified injury claims.
These fraudulent claims have resulted in an extra £215 being added to the average car insurance rate in the UK, says insurer AA.
The insurer has stated that motorists will be expected to pay £845 on average for motor car insurance. This represents a 34 per cent increase from last year’s £630. The insurer stated that the hike has been the largest one of its kind since 1994.
Nearly 50 per cent of each insurance policy, even discount car insurance policies, goes towards covering the cost of fraud, tax, legal fees, and whiplash claims. AA Insurance director Simon Douglas pointed to the rise in the number of personal injury lawyers operating in the UK as the reason injury claim figures have increased so sharply. He also stated that the resultant heightened levels of fraud have increased insurers’ costs across the board.
Car insurance groups have begun to call for stronger regulatory measures on claims management firms and personal injury law firms as a result. Insurers point to how whiplash claims have risen by a factor of 25 per cent since 2005, yet governmental statistical analysis indicates that minor road traffic injury figures are actually falling.
The last year alone has seen nearly twice as many companies offering services to those injured in road traffic accidents compared to the previous year. Many of these firms engage in aggressive television advert campaigns to drive client conversion.
Some companies have even gone so far as to institute loyalty schemes that encourage members to refer friends and family members that may require personal injury services. Some companies offer as much as £150 for every successful referral.
Meanwhile, £44 from every motorist’s policy goes to cover fraudulent staged accidents. These “crash for cash” claims are still so frequent in some parts of the country that drivers in some postcodes in the North West are finding it difficult to buy motor insurance at all.
Chief Supt Geraint Anwyl, of the Association of Chief Police Officers’ roads policing section, told the Transport Select Committee last week that the frauds were “highly organised and clearly very profitable”.
Induced collisions and staged collisions were taking place along with fictitious collisions, he said, risking lives as well as raising premiums.
The Insurance Fraud Bureau said that approximately 30,000 crashes were staged last year, with each claim averaging about £17,000. They cost insurers about £350 million and added £44 to the premium of every driver