Motor insurance premiums on the up as whiplash claims soar

12th March 2015

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Whiplash-type related claims have bounced back to near-record levels claimed insurer Aviva.

It says the UK is on track to submit more than 840,000 motor injury claims to its claims portal for the year ending April 2015, or 2,300 claims every day – marking a 9% rise on the previous year – or 200 extra claims per day.

Aviva said the situation is costing motorists £2.5bn, which adds £93 to the average motor insurance premium of £372.

A new report commissioned by the group has concluded that fundamental reform is needed to reduce the number and cost of whiplash claim, which will in turn, cut the cost of motor insurance for the long term.

Aviva analysed the motor injury claims it received in 2014 and found that 80% included whiplash, a significantly higher figure than seen in many other European countries. One of the reasons for the high number of whiplash claims is the huge financial incentives for the third parties who submit the claims.

Aviva’s data showed that 96% of personal injury claims it received last year were brought by third parties such as claims management companies (CMCs), personal injury lawyers and alternative business structures (ABS).

Maurice Tulloch, CEO, UK and Ireland General Insurance, Aviva said: “Last summer Aviva said that motor premiums will have ‘nowhere to go but up’ if we failed to address the excessive numbers of minor motor injury claims and the escalating costs surrounding them. We are here to help our customers when they need it, and pay genuine claims quickly. But we must address how to best treat the excessive number of fraudulent, exaggerated and minor whiplash claims which are driving up the cost of insurance.”

He added however that he is now witnessing a resurgence in the number and cost of whiplash and soft-tissue injury claims despite some very positive developments, such as the LASPO Act, which helped reduce customer premiums. The introduction of a new system for sourcing medical reports in soft tissue injury claims (known as MedCo) is also a step forward he noted.

Tulloch continued: “The UK’s compensation culture is at the root cause of the £93 cost of whiplash claims paid by motorists within their insurance premiums. Our customers have told us they are fed up with compensation culture and all its trimmings: the nuisance texts and calls from claims management companies, excessive lawyers’ fees and fraudsters abusing the system for their own financial gain. It doesn’t have to be like this.”

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