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MPs release damning report on car insurance

Call for action on whiplash claims

Car crash

MPs want an end to spurious whiplash claims that are driving up insurance costs

The Transport Select Committee today released a report calling for action on whiplash claims and referral fees paid to insurers.

MPs on the Committee have called for the end of ‘sharp practices’ by insurers that have inflated the cost of car insurance claims and therefore pushed up average car insurance premiums. 

Whiplash in the spotlight

Whiplash claims in particular came under the spotlight. The Committee felt that whiplash injury claims had directly contributed to rising insurance rates and want claimants to have to prove that they have suffered a whiplash injury.

Referral fees in car insurance were also highlighted by MPs as an area that needs to be addressed – this is where insurers will sell details of people who’ve had an accident, and will be potential personal injury cases, to solicitors and claims management companies. 

The recommendation from MPs is that insurers are banned from selling any form of customer information and that they expect the data protection legislation to be fully respected. 

Insurers have contributed to premium rises

Louise Ellman, chair of the Transport Committee, said on referral fees: ‘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.

‘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.’

Subjective diagnosis

On the issue of whiplash claims she added: ‘Whiplash is 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.’

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