The Transport Committee has called for tougher restrictions for whiplash compensation claims, in an attempt to curb “the runaway cost of motor insurance”.
In their follow up report, the committee credited the recent rise in motor insurance premium to market dysfunction and the escalation of uncontested claims for whiplash injury.
Launching the latest report, Louise Ellman, Transport Committee Chair said, “Insurers, solicitors and claims management companies have themselves driven up the cost of motor premiums by encouraging people caught up in road accidents they did not cause to claim for personal injury, car hire, and other legal costs.
“Although we strongly support access to justice, drivers should not be railroaded by cold callers into launching legal action. The insurance industry must abandon sharp practices that push up premiums such as passing drivers’ personal data to other parties or taking secretive referral fees from solicitors, garages and car hire firms.”
The Committee said the rise in personal injury claims is the main reason behind rising premiums.
“Many of these claims are for whiplash, an injury where diagnosis is often subjective and therefore very costly for insurers to challenge. The threshold for receiving compensation in whiplash cases should be raised and, if the number of such claims does not fall significantly, the Government should bring forward primary legislation to require objective evidence – both of a whiplash injury and of it having a significant effect on the claimant’s life – before compensation is paid,” Ellman added.
The report also questioned the practicality of the governments recent decision to ban referral fees relating to personal injury cases.
“The Government should ensure that the new legislation is implemented in a manner that will prohibit insurers from receiving referral fees across the board rather than simply in relation to legal action.”
While the report focused largely on personal injury claims, it noted that there are numerous factors that contribute to high insurance premiums and that tackling any one in isolation would have minimal or no effect.
