RAC Cars News


Fake Whiplash Claims Costing £1 Billion Per Year

By raccars Published

Image Source

MPs have been urged to tackle the growing problem of fraudulent whiplash claims in the UK, with the insurance industry claiming that between 50-60% of such cases, at 550,000 claims per year, are without merit. As whiplash symptoms are easy to fabricate, the condition has become the favourite tool of a 'claims manufacturing industry' encouraging drivers to make suspect claims.

With an average pay out of £2,500 for a whiplash case, plus fees for lawyers and specialist claims companies, the insurance industry claims it is being exploited to the tune of some £1 billion annually. This is not the first time the subject has been raised, insurance firm representatives having cautioned in the past that tougher medical examinations need to be carried out to reach more reliable diagnoses.

The UK is unique in this dilemma, with an increasing number of whiplash claims every year despite an overall decline in the number of car accidents – a phenomenon not experienced elsewhere. Other countries, including Germany, impose limits on the fees lawyers can charge for these kinds of claims. Each whiplash case can earn British lawyers around £1,500, while German compensation cases are restricted to about £300.

The amount of whiplash claims made annually in the UK has grown steadily for the past 15 years but exploded to what insurers consider epidemic proportions since 2007.

Along with the simplicity of faking the injury is the added incentive to bogus claimants that insurers offer a settlement figure rather than attempt to dispute the majority of claims, as payouts ultimately cost less than the fees incurred by defending such a case. While insurers have reason to suspect that anywhere between 10-60% of whiplash claims are 'exaggerated, misrepresented or fraudulent', they have no way of providing evidence to support the theory. They propose that more stringent medical tests would go one step towards deterring those tempted to submit fraudulent claims.

With a rise in the number of 'no win, no fee' claims specialists taking on such cases, it has been suggested that consumers are paying for an entirely manufactured industry to the sum of an additional £90 added to every car insurance policy to cover firms' expenses.

The situation has grown more serious with the advent of scammers organising crashes for cash. Participants in the scheme deliberately crash into another vehicle and then claim on the unfortunate victim's insurance policy for vehicle repairs and non-existent personal injuries.

Looking to Buy?
Search for cars