Claimant lawyer groups have urged the government to listen to the transport select committee’s recommendations on dealing with fraudulent and exaggerated whiplash claims.
But insurers have accused the committee of ducking the tough decisions that need to be taken.
Deborah Evans, chief executive of the Association of Personal Injury Lawyers, said the report marked “a shift towards transparency and truth”.
“Finally, some realities about the whiplash claims system have been recognised,” she said. “The 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.
“Some of the real mischief lies in credit hire and repair practices, which the Office of Fair Trading has described as ‘dysfunctional’. And we need to see an end to insurers trying to cheaply pay off crash victims before a medical assessment has been carried out.”
The recommendation for insurers to provide better data about fraudulent claims so that there is a stronger evidence base for policy decisions, is “very welcome indeed”, Ms Evans added.
“The government must listen to reason. To send whiplash claims to the small claims court will punish genuinely injured people by leaving them unrepresented. It will create an opportunity for claims management companies to take on cases in exchange for a share of the victim’s compensation, as we’ve seen with PPI claims, leading to a boom in cold calling and texting which could ultimately encourage more claims.”
The Motor Accident Solicitors Society said it was “greatly encouraged” that the committee had highlighted the role of insurers in helping to tackle fraud and called for an end to pre-med offers.
Chairman Craig Budsworth said: “The amount and extent of legal reform has already had a major impact on the balance between defendants and claimants and it’s reassuring to read that the committee has concluded the small claims limit should not be raised until the wider impact is better understood…
“We now hope that ministers listen to Parliament and accept the committee’s recommendations.”
The Association of British Insurers called on the government to “grasp the nettle and deliver the vital reforms needed to tackle the UK’s whiplash epidemic. Only fundamental changes to the current system will mean that insurers can deliver further reductions in car insurance premiums for their customers”.
Head of motor insurance James Dalton said “for too many dishonest motorists, whiplash has become the fraud of choice, increasing motor premiums for everyone”.
He said that while the committee was right to identify the need to tighten up the requirements for those submitting whiplash claims, its report has “kicked into the long grass making the tough calls for reform that are needed to help insurers combat the whiplash epidemic and deliver further premium reductions for hard-pressed motorists”.
Mr Dalton said insurers had delivered on their commitment to pass on the cost savings for the reforms to date, with average premiums falling 10% in the last year.
Nigel Teasdale, the Forum of Insurance Lawyers' (FOIL) motor sector focus team representative who gave evidence to the committee, described the report as “a valuable, common sense contribution to the whiplash debate… which provides a comprehensive framework for making progress”.
He added: “FOIL was especially pleased that the committee had taken on board its proposal for the limitation period for making whiplash claims to be reduced substantially from the current three-year limit. This step alone would reduce significantly the number of fraudulent or exaggerated whiplash claims.
“The MoJ holds the 'whip hand' here. FOIL hopes that it embraces the practical, sensible measures proposed by the committee, which will involve all sides of the industry in making adjustment to curb fraudulent claims, while dealing fairly with those suffering genuine injury.”
The Ministry of Justice had pledged not to issue its final decision before considering the committee’s report. Minister Helen Grant said: “Honest drivers should not have to bear the price of a whiplash claims system which has been abused and has contributed to increased insurance costs.
“Following the Prime Minister’s commitment last year, we have made major law changes to turn the tide on compensation culture and help ordinary people with the cost of living. We have heard this week that insurance premiums are now falling as this starts to make an impact.
“We have consulted on further measures to tackle the issue of bogus whiplash claims, including improving medical diagnosis and ensuring questionable claims can be challenged in court. We are grateful for the committee’s work on this issue and will consider their views as we decide on our next steps. We agree with them that people must continue to be able to make genuine claims.”