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Clamping down on Insurance Fraud

Of all the insurance scams that are perpetrated on UK roads, perhaps the biggest of them all is fake claims for whiplash injuries. Britain is known as the whiplash capital of Europe, with over half a million claims totalling £2bn every year. More than three quarters of all personal injury claims are for whiplash, and the Association of British Insurers (ABI) estimate that these claims add around £90 to the cost of motor insurance for every single British driver.

Why is there a problem with whiplash?

In most cases, whiplash is diagnosed purely on the description of symptoms by the victim, without any additional tests or scans. It is incredibly difficult to prove or disprove medically, as it is a subjective injury. This puts GPs in an awkward position, because even if they have their doubts, they cannot refuse a diagnosis without calling their patient a liar. What’s more, many insurers will payout for whiplash without a full medical report, which makes it incredibly easy for fraudsters to make a claim.

Not only do people claim falsely for whiplash, loss of earnings and other compensation after a crash, their friends and relatives often claim for the same injury even if they weren’t involved or even in the vehicle at the time. Many well known scams, such as the ‘flash and crash’ scam, or deliberately causing a crash by braking suddenly, are used to generate fraudulent whiplash claims.

So what is the Government doing about it?

There have been calls for action against false whiplash claims for a while now. James Dalton from the ABI says that they have “long called for more robust medical assessment of whiplash claimants”, while the Commons Transport Select Committee has been looking at the issue for a long time. They recommended last year insurers should avoid compensating whiplash victims unless they can produce an independent medical report.

In response to these calls, Justice Secretary, Chris Grayling has announced recently that the government intends to “turn the tide on the compensation culture” by “going after whiplash fraudsters”. The new measures that are to be introduced include the use of independent medical panels that will help to spot false claims for whiplash, as recommended by the Select Committee.

The ABI welcomed the move on behalf of UK motor insurers, saying that “setting up independent panels of accredited experts will help the UK shake off its reputation as the whiplash capital of Europe.”

However, Mr Grayling added a word of caution to insurers by saying that he wanted assurances that the savings made by the industry as a result of the new moves to combat fraud would be used to benefit drivers through lower premiums, not just to benefit shareholders.

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One Quote Direct Insurance Services Limited trading as Octagon Insurance Services is an appointed representative of Europa Group Limited and acts as a credit broker and not a lender in relation to premium finance contracts. Registered as a limited company in England and Wales No. 5479983. Europa Group Limited is authorised and regulated by the Financial Conduct Authority, Financial Services Register No. 309794. Registered office: Europa House, Midland Way, Thornbury, Bristol, BS35 2JX.

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