Particularly prevalent in road traffic accidents (RTA), whiplash injuries can be viewed as an easy money-making scheme, resulting in an excessive number of claims. In a bid to tackle the dishonest whiplash claim culture, the government has set its sights on implementing additional amendments to the law by April 2019. Yet, will the government’s plans make a difference to the culture and financial burden to the insurance sector?
The government’s determination to tackle the claim culture is driven by the fact that personal injury claims following an RTA is still 50% higher than in 2006 despite, as it reports, previous reforms, improvements in vehicle safety and a reduction in reported accidents.
Toughening whiplash laws
The government is committed to change, with the reforms even getting a mention in the Queen’s speech. The Ministry of Justice (MOJ) has been reviewing this area since 2013 and the first stage of amendments, includes five key areas:
- Fixed compensation tariffs for injuries lasting between 0 and 24 months, depending on the injury duration.
- Ability to reduce the compensation amount in the case of contributing negligence, or to increase the award for exceptional circumstances, with a cap limit of 20%.
- Ban to offer or request settlement without medical evidence.
- Limiting small RTA claims limit for personal injury to £5,000
- Limiting small claims for other personal injury to £2,000
In addition to this, set fees for solicitors has already come into effect This has minimised the amount of lengthy cases.
These policy changes will take steps towards tackling the number of over embellished whiplash claims, which are usually caused by minor motor accidents. This type of low impact soft tissue injury, commonly known as whiplash, are hard to diagnose and create little evidence, so has been challenging for the sector.
Rehabilitation-focus crucial Further changes in the law are expected to be proposed by the MOJ. The exact details have yet to be published, but it has been widely commented that this could include a voucher scheme for rehabilitation.
One proposal is that claimants would receive vouchers for the provision of rehabilitation instead of cash from insurance companies. These vouchers would allow access to the required treatment, in order to recover from their injuries, supporting genuine whiplash cases. However, the question remains as to whether claimants would undergo the rehabilitation treatment and seek compensation at the end of their treatment anyway.
For those more serious cases, early rehabilitation intervention can have a significant impact on the length and severity of injury, thus minimising the financial cost. The importance of rehabilitation information should not be overlooked, treatment is financially much more cost-effective than compensation.
The MOJ portal is the perfect opportunity for the industry to apply best practices and ensure that rehabilitation is a top priority. Additional reforms are being considered and a paper with recommendations is expected soon.
Tackling whiplash claims
Innovations in the insurance sector could provide another answer to minimising claims. Automation is increasing, with computers handling claims and scoring cases based on a series of data inputs.
With the set tariffs policy change, this could support a more automated handling of claims for many standard claims cases, creating robust procedures. Yet, whether through computer or human, the sector is becoming wiser to how to manage whiplash claims.
Fraudulent claims do exist and the MOJ’s reforms do take steps towards deterring a dishonest claim culture. Criminals, tagged as ‘crash for cash gangs’, have capitalised on this, setting up accidents in a bid to claim for injuries. Limiting the claims amount with the set tariffs, will act as a deterrent to this illegal practice.
Yet, there is still a certain amount of ambiguity around the impact of the proposed and expected changes. Rehabilitation vouchers support the ideals of medical intervention to ensure individuals get back to health quickly, but the nature of whiplash being hard to diagnose continues to be challenging. Will the reforms make a long-term difference to whiplash insurance claims? Only time can tell…
If you are interested in reading about the subject of motor, you may like to read our thought leadership piece on innovation in the sector.