While car insurance companies are quick to point to rising ‘no win no fee’ legal claims as the culprit for increases to massive car insurance rate increases, industry experts say that insurers need to get their act together.
Much has been made of how the UK has been named Europe’s new ‘whiplash capital,’ based on the fact that more than 1,500 claims for whiplash are made every day, leading to costs of around £2 billion on an annual basis. These costs are absorbed by the customers of the nation’s motor car insurance providers through increased premium pricing.
There have been proposals to limit ‘trivial’ whiplash claims by making it harder to meet the qualifications to make a claim, such as it is in Germany, where you must be traveling at a minimum rate of speed before being eligible to make a whiplash claim. However, many insurance industry critics have said that providers are not completely blameless over the issue, and many have said that insurers need to defend whiplash claims more rigorously.
Insurers say that there are too many hurdles to overcome for them to defend claims more successfully, as the current medical threshold requirements for a whiplash diagnosis are currently set to a very low level. Fraud is also a large problem, with many whiplash claims being made by duplicitous drivers and claims management firms that either encourage wholly fabricated claims or exaggerate the extent of injuries in a collision.
Of course, insurers do bear a portion of the responsibility for creating a so-called ‘compensation culture’ by selling on the personal details of their customers to these same claims management firms for a few hundred quid each, only to see the practice backfire when their costs increase as a result.