Debunking Whiplash: Which nation has the weakest necks in Europe?

In a move intended to reduce fraudulent claims and cut the £2 billion cost of whiplash, recent insurance reforms in the UK appear set to push the personal injury small claims threshold from £1,000 to £5,000 and end the right to cash compensation for minor whiplash injuries. But what effect will this have for claimants and insurers? Mark Strang, business development manager at ISO, argues that new developments in data analytics can provide greater insight into classifying and comparing whiplash claims across Europe

An often-quoted statistic is that more than 75 per cent of personal injury claims in the UK are for whiplash, compared with just three per cent in France. In detail, the latest available UK data suggests the average general damages payout was £2,638 for more than 17,000 personal injury claims in May 2016.*

Is this just a UK phenomenon? Why is there such disparity? And, indeed, is there such disparity? Recent research from the Association of British Insurers (ABI) indicates that whiplash incidences in France have actually risen sharply and now account for 30 per cent of all French personal injury claims.

The French connection

In France, whiplash compensation not only comprises general damages (pain and suffering) but also, in many claims, temporary or permanent functional disability. It’s therefore difficult to compare with the UK, but our analysis shows that payouts are typically higher in France than in the UK when combining these sums. Yet France undoubtedly has a lower rate of whiplash claims as a percentage of all personal injury claims.

There’s also a significant variation among some French jurisdictions in what is paid in court for whiplash compensation, leading to an increase in whiplash cases in regions where compensation rates are higher.

For example, a leading insurer working with ISO operates in the South of France, where whiplash compensation rates are above the national average. Not surprisingly, our stats show a major rise in whiplash claims in the region.

In France as a whole, we do indeed see fewer claims than in the UK, but far more resulting in permanent disability—around a third of all claims. Compare this with the UK, where less than five per cent of claims result in permanent disability.

Getting a second opinion

Is the difference because whiplash claims are more rigorously contended in France?

French insurers can indeed instruct a medical expert to produce a report on the injuries sustained, which will ultimately influence the final payout. But these medical experts inevitably have minor variations in their reports, affecting the consistency of whiplash payouts. As we know, minor whiplash cases are difficult to prove objectively in a medical examination, so there’s a further degree of ambiguity.

As I see it, apart from varying regulatory rules and differences, the common thread in whiplash claims in France and the UK is a need for greater consistency, which is something that more advanced data analytics can identify and help bring to many European markets.

Enter analytics

In ISO’s experience, and as the French example shows, whiplash compensation varies significantly in different countries and indeed among regions within a country.

Data analytics can be embedded into claims solutions and deployed across more than one region and more than one country, providing the data storage and analysis functionality that will arm European insurers with greater insight into similar settlements for specific medical conditions.

Claims handlers can spend less time negotiating the high volume of whiplash claims, while also being supported with detailed information and settlement benchmarks when trying to resolve complex cases that may involve medical complications.

By bringing know-your-opponent analytics to the negotiating table, we can protect an insurer’s bottom line by cross-referencing prior claims with similar injuries and negotiation patterns. Using such functionality, claims handlers can agree on a settlement that is fair for all parties involved and in line with industry norms—reducing the risk of litigation.

Consistent classification

From my perspective, there’s a strong case for introducing more rigorous consistency to the claims process.

We can cut the frequency of under- and overpayments. And insurers operating across geographies can benefit more broadly because the analytics tools can bring together new data streams to identify geographical claims patterns and establish an overview of European markets.

Regardless of the regulations in play, one thing that never changes is the need to quantify the severity of injuries.

This can be tied to the International Classification of Diseases (ICD). By determining injury severity based on the ICD, we can look to standardise payouts in specific jurisdictions and eliminate the ambiguity that often affects the final compensation figure. The Judicial College Guidelines in England and Wales, while useful, do not provide the ability to identify levels of severity for multiple injuries.

The future for whiplash claims

The recently announced whiplash claims reforms are certainly creating waves in legal and insurance circles.

Will we see a requirement for whiplash injuries to be proven objectively before being eligible for compensation? What will be the effect if minor claims are no longer compensated? Will we simply see a rise in claims featuring more severe, harder to diagnose, or even permanent injuries? Will this result in higher payouts overall?

In other jurisdictions where thresholds have been introduced, such as some US states, more complicated claims have become the norm.

In New Jersey, for example, disc herniation is now reported in 40 per cent of whiplash claims in an effort to exceed the threshold, compared with one to two per cent elsewhere. This is why we need to introduce better data analytics that calculate payouts based on injury severity and similar historical settlements.

In this way, we arm claims handlers with the relevant knowledge to confidently negotiate a fair settlement—fair for the claimant and fair for the insurer.

*Source: U.K. claims portal data, May 2016

Mark Dugdale