Three years have passed since a round of reforms aimed at reducing the prevalence of fraudulent insurance claims throughout the UK was enacted. In that time, insurers have taken to the ground in an effort to continue the industry’s ‘fight’ against excessive claims that eat into their bottom line. A new call for reform relating to soft tissue injury claims processes, more commonly referred to as whiplash claims, is derived from the same money-hungry ethos to protect stakeholders of insurance companies – at all cost.
Late in 2016, the soft tissue injury claims reform was published by the Ministry of Justice, with an inarguable focus on reducing the high cost of fraudulent claims related to whiplash experienced after a road traffic accident. Within the reform, insurance companies and the UK government cite a need for putting the proverbial lid on the amount of compensation available to individuals bringing claims against insurers to offset the physical discomfort and, at times, psychological effects of a moderate to severe road accident. Within the reform proposal, a savings of £200 million per year would line the pockets of insurance companies by deterring soft tissue injury claims from ever seeing the light of day. The trickle-down savings to motorists has the potential to be a mere £40 per month, per insured.
The proposed reform comes in parts, with the largest focus on two potential solutions to the excessive compensation culture perceived to be in placed throughout the UK. Either eliminating compensation for pain, suffering, and loss of amenity for whiplash victims altogether or capping it at a menial £400 would, in theory, prevent fraudsters from bringing a soft tissue injury claim against an insurer. Removing the financial incentive to start the claims process would also be viable with the help of increasing the limit allowed in small claims court to £5,000 – up from £1,000 in personal injury cases. In addition, the reform’s proposal takes away the ability to bring a soft tissue injury claim to an insurer without medical evidence that an injury was sustained. The combination of these reforms serves a single interested party: the insurance companies.
The False Narrative
A common theme has run through discussion of reform related to road traffic accidents: an epidemic exists of false whiplash claims within the UK. According to the government, and the Association of British Insurers, soft tissue injury claims resulting from traffic accidents have risen by 50% in the last decade. Moreover, the average cost of a whiplash claim comes in at a whopping £1,850. Unfortunately, these figures do not take into account the growing number of vehicles on the road, nor do they adequately account for the fact that road traffic accidents, overall, have declined in recent years. Instead, the focus is placed on the amount of money distributed to individuals filing soft tissue injury claims and how that puts an undue burden on the country’s insurers.
In reality, the cost of personal injury claims relating to road traffic accidents has continually fallen over the last five years, by an impressive 30%. The reduction equates to a £2.5 billion increase in profit for insurance companies; however, insurance premiums have steadily increased for the past three years for nearly all motorists. There is a clear disparity between the narrative insurers are spewing to the public and the actual data, but the proposed reforms highlight a potentially significant win for insurance companies and their profit margins. Taking away compensation for pain and suffering and inhibiting access to sound legal advice for a soft tissue injury claim protects the powers that be, not individual road users, not matter what spin is placed on the potential change.
A Forgotten Demographic
Digging deeper into the details of the proposed reform uncovers a path toward padding the pockets of insurers without much question, but an added thorn in the side of some road users is even more alarming. A specialist team of motorcycle accident solicitors explain, “There is a risk that bikers and other vulnerable road users including pedestrians and bicyclists may be adversely affected by these latest reforms. While it is important to question the perceived compensation culture, whiplash epidemic, and real level of fraud in the industry, proposals designed to combat these issues may end up negatively impacting those who are not part of any perceived problem.”
The firm states that injuries to motorcyclists are out of proportion to their presence on the road; bikers account for 1% of total road traffic but an astonishing 19% of road user deaths. The claims brought against insurers after motorcycle accidents occur are more complex than other traffic incidents, due in part to the fact that there is no protection offered by an enclosed vehicle. Adding to the problem is the reality that motorcycle accidents are more likely to cause confusion when it comes to blame, creating the need for legal assistance in claims cases. Reducing the amount of compensation and the ability to retain legal expertise under the new reforms sets bikers and other vulnerable road users down a path that does not lead to fair compensation.
While the reforms are not yet in place, the discussion surrounding the proposed changes speak to a clear nod in favor of insurers. The millions of savings will certainly help increase profit margins of already healthy insurance companies, and no promise can be made that honest, safe motorists will experience any reduction in premiums given the track records of the largest insurers to date. Time will tell if the soft tissue injury claim reforms work to the benefit of motorists, including vulnerable road users, to any noticeable extent.