Drivers could see the cost of car insurance slashed after a report claimed the market was dysfunctional, open to abuse and encouraged criminal behaviour. Bogus motor insurance claims currently cost Britain £2billion a year. The Association of British Insurers (ABI) estimates that whiplash claims alone add £90 to the average person’s premium.
The Transport Committee report claims the insurance industry inadvertently encourages dishonest behaviour because firms are willing to pay compensation for whiplash without the claimant undergoing a medical examination by an independent expert.
In its paper on motor insurance the Transport Committee, which examines the performance of the Department for Transport, concluded the Government must:
• Outlaw insurance payouts for whiplash injuries before medical examinations
• Prevent solicitors commissioning medical reports on whiplash and other soft tissue injuries from medical experts who aren’t genuinely independent
• Ban solicitors from generating more work by offering inducements, such as cash or tablet computers, to encourage people to make a claim
Chair of the Transport Committee Louise Ellman MP said: “This is our fourth report on the cost of motor insurance and while premiums are now falling, aspects of the market remain dysfunctional and have encouraged criminality to take root. Further action is still required to tackle fraud whilst protecting genuine claimants.”
However, motor industry experts believe it will take more to cut back on fraudulent claims. Simon Marsh from in-car camera company SmartWitness said: “The good thing is it will deter opportunists who think nothing of claiming because ‘that’s what insurance is for’.
“What it won’t do is stop criminal gangs. Unlike breaking a limb, there are no physical symptoms of whiplash that can’t be faked. And for the less scrupulous in our society, being offered a share of a hefty insurance payout will bring out acting skills Kenneth Branagh would be proud of. Even a medical panel will struggle to get to the truth.”
The report also wants the Government to give courts the power to strike out insurance claims that involve gross exaggeration. It wants data sharing about potentially fraudulent claims between insurers and solicitors to be compulsory rather than voluntary. And it calls on the Government to press the Solicitors Regulation Authority to stop some solicitors from maximising their income by commissioning unnecessary psychological evaluations.