Whiplash Claims: The CostThu, 12/06/2014
The largest cost to insurance companies is the cost of claims. Motor insurers have not made an underwriting profit (a profit on the actual insurance they sell) since 1994. Of the claims costs associated with motor insurance the largest percentage is for personal injury claims, and there is one type of claim that has been growing in notoriety in recent times: Whiplash.
In 2012, 35% of premiums paid (on average) were spent on personal injury claims in total, and 20% of premiums were spent on whiplash claims alone. 
Whiplash is defined by the NHS as being a neck injury caused by a sudden movement of the head forwards, backwards or sideways – resulting in damage to the ligaments and tendons in the neck.
The Association of British Insurers (ABI) refers to Britain as the ‘Whiplash capital of Europe’. 78% of personal injury claims in the UK are for whiplash (compared to 30% in France and Denmark). Whilst there has also been a 20% fall in the number of injuries reported to the police between 2006 and 2011, personal injury claims made to insurers have increased by 40%. It is estimated that £90 of the average motor insurance premium accounts for whiplash claims alone.
So why has it got so out of hand? Well firstly it is difficult to diagnose. Diagnosis is usually simply based on a description of the symptoms by the claimant. It is relatively easy to exaggerate as there is currently no definitive physical test to prove or disprove the condition. There have also been examples of uninjured persons being “encouraged” to submit claims and coached in how to describe the symptoms to an examining doctor.
With whiplash claims causing UK motor insurance premium hikes of late, the industry has been attempting to try and find a way to crack down on exaggerated claims, without deterring those who are suffering from genuine whiplash injury. The ABI is calling for doctors and lawyers to work in partnership to detect fraud and prevent exaggerated claims from succeeding.
As well as addressing the problem of exaggerated claims, the industry wishes to tackle the root cause – the accidents that cause the injury. This is of course a road safety issue. The importance of leaving adequate braking distance between vehicles cannot be stressed enough. The government has assisted in getting the message across by creating a new offence of ‘tailgating’ that is subject to a £90 on the spot fine.
The cost of whiplash claims affects every driver in the UK as the costs are eventually passed on to the policyholders. Until there is a definitive test for whiplash there will continue to be the opportunity for exaggerated claims. Hopefully the insurance industry, with help from the legal and medical professions, will succeed in their campaign against the fraudsters as, until something changes, we will all be paying the price!