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The Institute and Faculty of Actuaries comments on the Transport Select Committee's investigation into whiplash claims

21 May 2013

David Brown, from the Institute and Faculty of Actuaries said;

"The Institute and Faculty of Actuaries (IFoA) has been compiling data from across the motor insurance industry since 2009 on third party accident claims (TPI). The data has shown a sharp correlation between hot spots in England and Wales for small TPI claims (considered as being up to £20,000), for injuries such as whiplash, and the locations of claim management firms - commonly known as ambulance chasers.  Since 2009 there has been a sharp increase in these claim figures and in 2011 (the most recent data) IFoA research showed that the regions in England and Wales with the highest volumes of claims were higher than those in what many consider the most litigious country in the world, the USA.

"The Transport Select Committee is undertaking an investigation into such claims and the Justice Secretary has stated his intention to reform small injury claims. The increased frequency of small claims, particularly for whiplash injuries, and the associated costs have contributed to a rise in the price of insurance over recent years. IFoA research has estimated that whiplash claims may be adding about £90 to the cost of the average motor insurance policy. The proposed reforms could contribute to changes in behaviour and a reduction in the number of claims.

"However motor insurance company premiums in 2011 did not meet the costs of claims and expenses and competition has driven average premiums to decrease since then. As a result the favourable impact of the reforms, whilst significant, may not necessarily lead to any immediate significant reduction in premiums."

The Institute and Faculty of Actuaries publishes the 2012 TPI data in the summer of 2013.

 

 

For further information, please contact Karen Wagg on 077 255 58 551 or Karen.wagg@actuaries.org.uk