LMA lays out plan to cut whiplash claims bill

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    The Lloyd’s Market Association (LMA) has laid out a five-point plan for reducing the annual national bill of over £2 billion for whiplash motor insurance claims.

    Responding the Government’s Transport Select Committee inquiry into whiplash and fraud, the LMA proposed five key changes to the current system which, it argued, would significantly reduce the number and cost of whiplash claims in the UK, particularly reducing the number of frivolous and fraudulent claims.

    The recommendations made by the LMA to the Transport Select Committee in its response are:

    – Increase the level of injury claims handled by the Small Claims Track from the current £1,000 to £5,000.

    – Introduce a new fit-for-purpose medico-legal process with stronger governance of costs, production and content of medical reports. Currently many of the medical agencies conducting assessments of whiplash claimants are owned by solicitors. This is a situation the LMA wants to see changed. Better categorisation of whiplash injuries is also needed.

    – Publish a new public tariff of damages that courts can award to whiplash claimants, dependent on the severity of their condition. The LMA noted that a similar system operates successfully in France, and agreed scales of damages have worked well in other areas of compensation in the UK.

    – Reduce the period in which a whiplash claim can be made from three years after the accident to six months (or pay less damages for claims submitted more than 6 months after an accident).

    – Initiate a new public debate on the appropriate level of damages for whiplash claims in the UK.

    David Powell, the LMA’s Underwriting Manager, said: “We welcome the Transport Select Committee’s investigation of whiplash claims. This is a timely review of what has become a difficult and costly issue for the insurance sector.

    “A major difficulty is that the low barrier to success for whiplash claims, and the high cost of opposing them, often makes it uneconomic for defendants to mount a legal defence – even when claims are weak. Whiplash is a highly subjective injury: the accepted legal evidence of causation and injury is entirely based on doctors describing symptoms reports by the claimant – potentially up to three years after the event.

    “We believe the proposals outlined by the LMA would be sufficient to reduce the frequency and cost of low value motor claims in the next few years.

    In 2012, there were around 828,000 whiplash claims in the UK, up 60% since 2006.

    The Transport Select Committee will outline its recommendations on whiplash claims later this year.