Crash test for bogus whiplash claims

There are around 400,000 whiplash claims every year in the UK, each costing an average of £5,000. Including legal fees, this costs the industry £2bn a year - equivalent to 4,000 catastrophic injury claims worth £500,000.

These staggering numbers are a relatively new phenomenon. There has been a rise in whiplash claims of around 60% since 2006, despite a reduction in road accidents and improvements in the quality of vehicle seats and head restraints.

So, why is this category of insurance claim out of control, and what could be done to tackle the problem?

The general medical opinion is that 60% of genuine whiplash patients achieve a full natural recovery, without treatment, within three months. Allianz has been sent the results of a broad-based audit of prognoses of medico-legal reports since 2006. This shows that only 17% of claimants were expected to recover within three months, and only 37% within six months. As examinations mostly take place within weeks of the accident, it is questionable whether an accurate prognosis can be given so soon after the event.

Allianz has also noticed a growing trend for claimants to submit pro-forma invoices for physiotherapy treatment along with Ministry of Justice stage-two settlement packs, expecting insurers to pay-up. This raises a number of concerns. Is treatment necessary and, if so, why is it not completed before stage two? Was treatment recommended by a medical expert? If insurers pay on a pro-forma, how would they know if treatment to that value was given? If treatment is not delivered, what happens to the money? This may seem like penny-pinching, but across high volumes of claims an enormous amount is at stake.

Last but by no means least, Allianz is seeing a growing number of low velocity impact (LVI) claims, which would not normally cause whiplash or any other injury. We have many examples where multiple whiplash claims have been received for minor incidents. It is worrying that medical experts are giving supportive reports in these circumstances.

There is no point assigning blame for what is happening; the emphasis must now focus on solutions. Here are some suggestions:

• Insurers need to work closely with claimant lawyers to help stamp out LVI fraud.

• Claimant lawyers need to consider with insurers how to identify claimants who need physiotherapy, and how and when that should be delivered.

• Medico-legal practitioners’ representatives need to discuss accuracy of prognoses, timing of examinations and causation with insurers and claimant lawyers.

At a time when the cost of motor insurance is under the microscope, it is worth noting that 20% of every premium is spent on whiplash.

The cost to the taxpayer is also considerable ­– each time a patient visits a GP for whiplash, the government pays an £18 consultation fee – adding up to more than £8m per year.

Only by adopting a collaborative approach can we hope to ensure that all whiplash claims are genuine, which is in the best interests of insurers, policyholders, the government and taxpayers. IT

Bob Rabbitts is a technical claims manager at Allianz Insurance