The Government’s Transport Select Committee’s call to abandon ‘sharp’ practices in regards to way car accident claims are managed by car insurance companies and claims management firms was welcomed by the Association of British Insurers recently.
Market dysfunction is the primary cause of out of control motor car insurance costs, the committee said, adding that whiplash injury claims were especially to blame due to the difficulties insurers face when trying to contest these injuries in court. Claims management companies, solicitors, and insurers all share the blame, the committee remarked, as premium prices have been driven up due to the encouragement these firms give to those finding themselves embroiled in car accidents through no fault of their own.
These individuals have been enticed to claim for legal costs such as car hire and personal injury, according to Louise Ellman, committee chair. The industry as a whole needs to abandon the practices, such as selling on the personal details of drivers involved in accidents, that led to insurance premiums spiraling upward from increased claims volumes, Ms Ellman also said.
The committee chair specifically called for action to be taken on the whiplash claims sector, as many insurers find it more cost-effective to settle a case due to the difficulties they face challenging a whiplash diagnosis. Ms Ellman recommended that, in regards to whiplash cases, the threshold for receiving compensation should be raised, with the Government taking further legislative steps by making objective evidence of injury a requirement if claims levels continue to rise.
Nick Starling, ABI general insurance director, said that as every driver wants the best car insurance they can afford, taking steps to minimise the impact of whiplash claims on the industry can aid insurers in providing this cover to their customers.