Many consumers back the notion of replacing cash damages for accident claims with medical rehabilitation as a way to crack down on the activities of claims management companies (CMCs), according to a survey commissioned by leading insurer AXA.
The Populus survey of 2,131 people found that 52% supported the idea. The government is set to consult shortly on removing the right to claim general damages for ‘low value’ personal injury claims, and on raising the small claims limit for ‘minor’ whiplash cases to £5,000.
There was a significant disparity depending on the age of respondents, however, with 38% of 18-34 year-olds backing rehabilitation instead of damages, compared to 70% of those aged 65 or more.
AXA’s third annual report CMCs found that the number of cold calls received by consumers, and their unhappiness with the practice, both continue to be high. Three-fifths of respondents had received an unsolicited communication from a CMC in the previous week, and a similar number thought they should be made illegal.
With the government currently consulting on introducing a 15% cap on how much CMCs can charge consumers, the survey found strong support for the principle, with a cap of 6-10% favoured.
Amanda Blanc, the chief executive of AXA Insurance, said: “This report clearly highlights that despite the firmer stance being taken by government and regulators, CMCs continue to bombard consumers with communications.
“Key regulatory changes should include a one-year time limit to file a claim, mandatory caller line identification and a ban on automated voicemail messages. A fee cap is also clearly supported by the public and we propose a maximum fee of 10%… We believe that this package of reforms would significantly disincentivise fraudulent behaviour.”
Professor Chris Parsons of Cass Business School, who was brought in to provide independent commentary on the findings, said: “It is evident that there is strong support for the regulatory measures recommended in this report and that the government still has a long way to go in curbing the worst aspects of CMC activity.”
Meanwhile, Aviva said today that it detected more than 3,000 organised crash for cash claimants last year, with one in four of them occurring in Birmingham, while one in every nine whiplash claims is “tainted by fraud”.
While the number of induced accidents remained high, the insurer said that the number of staged and bogus accidents fell by 40%, “as tougher fraud prevention tools at the point of sale have stopped fraudsters accessing Aviva’s products”.
Aviva said motor fraud remains the largest source of fraud it detects, representing 60% of all claims fraud with a value of £58m. It said it has more than 17,000 suspicious whiplash claims under investigation, with 4,000 motor injury claims linked to “known fraud rings”.
However, Thompsons – the claimant firm leading the charge against the insurance industry – dismissed Aviva’s statistics as “bogus and politically-motivated”.
The firm said that when it conducted its own survey of police forces in 2014 using freedom of information requests, it could find no evidence of fraud on the scale claimed by the insurance industry.
Of seven forces contacted, six could not provide data or explain what the insurer allegations were based on and even the industry’s fraud bureau could not substantiate the figures, later admitting they were based on ‘suspicions’.
Tom Jones, head of policy at Thompsons, said: “Aviva is claiming that it is being hit by a motor fraud ‘pandemic’ and yet the industry’s own figures show motor accident claims costs have fallen 29% in the last five years saving the insurers an aggregate £6.68bn.
“What the government and the insurers are doing is whipping up a storm about fraudsters scamming the system, creating the impression of a fraud crisis – when there is no evidence to justify it – in order to get out of paying up when honest motorists suffer an accident.”