Transport Select Committee tells insurers to get their house in order

The chair of the Transport Select Committee, Louise Ellman MP, has told insurers that they must take immediate steps to end practices which encourage fraud and exaggeration in whiplash claims and has rejected the idea that the small claims court limit should rise to £5,000.

Following the release of the Committee's report in whiplash claims, Ellman said that there had been surprise among the Committee members when they discovered that insurers will sometimes make an offer to claimants even before a medical report has been received.

The MPs also expressed disappointment that their previous recommendation to make the links between insurers and other parties involved with claims more transparent, had been ignored.

“Motor insurers have committed to passing any reductions in costs arising from legal reforms to consumers in the form of lower premiums. We recommend that the Government explain how it will monitor that this commitment is honoured,” she said.

“To help bring insurance premiums down the Government must tighten up the requirements for motor insurance claims and ensure that insurers honour their commitment to reduce premiums.”

The Committee also said that there were no comprehensive statistics that prove that the UK is the 'whiplash capital of the world' as suggested by the Government and dismissed the proposal to raise the small claims court limit.

The MPs warned that access to justice could be impaired by Government proposals to switch whiplash claims between £1,000 and £5,000 to the small claims court, particularly for people who do not feel confident to represent themselves against insurers using lawyers to contest claims.

The report also concluded that the use of the small claims track could prove counterproductive in efforts to discourage fraudulent and exaggerated claims in the absence of expert evidence being submitted for low value claims.

There was support from the Committee however, for an accreditation scheme for medical practitioners who provide medical reports in relation to whiplash claims.

“We were concerned to hear suggestions from insurers that medical reports routinely overstate the likely duration of whiplash symptoms. If true, this is evidence of systemic exaggeration of claims. A random audit of medical reports should be conducted each year to identify poor practice and improve standards,” said Ellman.

APIL chief executive Deborah Evans welcomed the Committee's findings, saying that they finally revealed some realities about whiplash.

“The Transport Select Committee has acknowledged that the Government has, so far, largely been influenced by the insurance industry in its plans to tackle high motor premiums, and called for insurers to get their house in order. I couldn’t agree more,” said Evans.

Writing in a blog in response to the report, James Dalton, Assistant Director and Head of Motor and Liability insurance at the ABI said that consumers have long demanded cheaper car insurance premiums, but “once again, the Select Committee has missed the opportunity to grasp the nettle and recommend what’s needed to deliver what consumers really want.”

“Today’s report shows how nervous [politicians] are about making the tough calls for change to help insurers combat the whiplash epidemic and deliver further premium reductions for hard-pressed motorists,” he added.

Mark Dugdale