Whiplash claims – the truth, the whole truth and nothing but the truth…

Whiplash claims - the truth, the whole truth and nothing but the truth...
My car was damaged recently. It was in a car park and I was somewhere else. I claimed on my own insurance, and  was directed by them to a repair garage who  took my mobile number, ostensibly to contact me when the car was ready. They did not. Instead they sold on my details to a claims management company . I know this because I received a text a week later telling me that I had been in an accident and was entitled to £2,750.00.  Coincidentally,   the insurance industry blamed a projected rise of 13% in  premiums on the rise in personal injury claims.

Whiplash claims now make up 70% of all motor accident claims. Typically neck and back  symptoms might last 3 – 6 months with the courts awarding damages of between £1,500 – £3,000, so the claims themselves are not large. However it is an injury which has few objective signs and there is a clear temptation for fraud and exaggeration.

Evidence was placed before the Transport Select Committee in 2011 that the insurance industry loses £2.1bn per annum to fraudulent claims,  whether by “cash for crash” staged accidents or invention of symptoms.  The industry presents a story of the honest citizen paying the price for a system milked by the  unscrupulous.

The first point to make is that the number of claims in Scotland is dwarfed by those of our English neighbours. Figures obtained from the Compensation Recovery Unit show that instead of a proportion of around one tenth based on population, the figure is one twenty fifth.

The  Commons Transport Committee Report “The Cost of Motor Insurance” noted that other countries without the whiplash problem included France, Germany, Spain and ………Scotland.

The reason is that Scotland has few claims management companies, and a minimal  referral market.

A brief tour round the road traffic claims industry might illuminate where the real opportunities are:-

1. Claims Management Companies
These are not lawyers. Their business model consists in the identification and encouragement of possible claimants.

Details are then sold on to solicitors  for amounts of between £250 to £600.  They operate customer friendly  24 hour helplines and have a ubiquitous online and TV presence. It is claimed that they fulfil a need in that people are  too intimidated to speak to a lawyer.  Whilst that may have been the case 20 years ago, is it really true of the current consumer? For anyone who can operate a mouse or turn the Yellow Pages, this is an introductory dating service which is wholly unnecessary.

2. Credit Hire Companies
These companies will provide a replacement vehicle whilst yours  is being repaired. They will have paid a referral fee generally of around £500, typically to a body shop.  Their hire costs greatly exceed the market rates.  These will then be transferred to the insurer of the  at fault driver.  An example of the business model in operation is the 2010  case of Clark v. City of Edinburgh Council .

After examining the  credit hire arrangement the judge  concluded that the unwitting pursuer was effectively required to raise proceedings for the sole purpose of recovering his credit hire payments .  His 14 year old Toyota Celica (value of £1,000 with 91,000 miles) had been damaged and the Accident Exchange Company provided a replacement Honda Civic 2 litre GT  with 900 miles on the clock. The hapless Mr. Clark then racked up daily hire costs of £161.63. He sued for a total of £12, 857.13.  In a withering judgement Lord Turnbull held that a “new vehicle for old” hire approach was not appropriate and awarded him a total of £1,950.00.

3. Your own insurance company
Insurers frequently incorporate an  add-on which provides legal cover . The claimant is then referred to the insurer’s panel solicitor .  You may believe that this recommendation is of a badge of quality. In fact the insurer receives a referral fee for every claimant.  The industry is coy about the value of  these backhanders, but estimates vary between £2 – 4 billion per annum.  These payments never appear in the industry analysis of cost per claim against premium income.

There may be further  conditions whereby the solicitor agrees to direct the client to specific medico-legal practices or car hire firms, generating more referral fees. Road traffic claims are not difficult. This is work which any no win, no fee lawyer will do for you without charge.

The Transport Select Committee has recommended that insurers should publish on their website a list of the firms with which they have referral arrangements, an indication of the level of fees paid and a clear explanation of how referral arrangements work and their purpose.  They should make it clear  that claimants need not use the recommended  solicitor, vehicle repairer or credit hire firm .

As you read this someone is receiving a text from a claims management company encouraging a claim to be made.

This is a system which  provides profit opportunities for vendors of fresh air at every stage. The Transport Select Committee has described it as “a dysfunctional merry –go-round”.   The problem is currently being addressed in England under the  “ Legal Aid Sentencing and Punishment of Offenders Bill 2011”,   which amongst other things outlaws  referral fees. It remains to be seen whether this will cure the English patient.

So when you get your renewal premium don’t blame your fellow motorist, or at least those of us living in Scotland.

And has the time not come for concerted agitation for much more  significant postcode discounts?

‘Complete and utter Maudeness’ – Minister creates havoc at home with lethal ‘advice’ on fuel storage.

'Complete and utter Maudeness' - Minister creates havoc at home with lethal 'advice' on fuel storage.

The Telegraph

Before we vilify Francis Maude for truly mind-bogglingly staggering ineptitude, we should consider his pronouncement within the context of the government’s cavalier approach to health & safety legislation in the UK.

Firstly we had Lord Young of Gaffem’s report ‘Common Sense Common Safety’, wherein the noble peer delivered what was expected of him and proferred the idea that we could dispense with much of the UK’s current health & safety regulations.

David Cameron fell on the report like a hungry wolf spying the fatted calf and immediately announced a raft of cut backs and claw backs as he began the process of dismantling 178 years of hard fought progress in worker and public safety in this country.

So far, so bad.

The primary justification for this rush to deregulate is the much-vaunted yet fatally flawed theory that less onerous health & safety regulation means more profit for business.

Then we had Professor Ragnar Lofstedt’s report ‘Reclaiming Health & Safety For All’. Professor Lofstedt has clearly stated that he is not in favour of ‘radical’ reform, apparently contrary to prime minister David Cameron’s attack on the ‘monster’ of health and safety.

The PM referenced Lofstedt’s report from December as he blamed the ‘albatross’ of health and safety legislation for holding back British businesses but the King’s College academic, insisted he had never called for significant changes to legal policy and did not believe in a compensation culture.

When asked if he was worried his report could be hijacked for political purposes, he said: ‘I am concerned about it. I am concerned my review could be misused.’

So bad, so far…

‘The scores on the doors’ : Reports delivered – 2. ‘Common Sense’ health & safety strategy in the UK – 0.

The second assumption underpinning the current madness is the notion that most day to day activities and even most workplaces are intrinsically safe and thus we only require a light touch on the regulation tiller to ensure our safety as we go about our daily lives…

and this is where Francis Maude comes in.

MINISTER CREATES HAVOC AT HOME WITH LETHAL ADVICE ON FUEL STORAGE AS WOMAN SUFFERS 40% BURNS IN JERRY CAN FIRE.

Fire officers have warned the public not to store petrol in their home after a woman suffered 40 per cent burns in a fire started by petrol she was transferring between containers, following advice from government minister Francis Maude that motorists should consider storing fuel in anticipation of a tanker drivers’ strike.

The victim, 46-year-old Diane Hill, was badly injured after her clothes caught fire while decanting the fuel from one container into another at her home on York. A fire service spokesman said:

‘She was using her cooker at the same time as pouring petrol from one container to another using a jug after her daughter had asked for some petrol.’

The mother-of-two, from the Acomb area of York, was taken to Pinderfields Hospital in Wakefield, Yorks while two firefighters wearing breathing equipment dealt with the aftermath.

At the time of writing no apology has been received from Mr Maude…but the real bad news is that he probably doesn’t know what he and his government should be apologising for.