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Select committee inquiry

The cost of motor insurance: whiplash

Closed

Transport Committee · Opened 5 November 2013 · Closed 13 January 2015

8 recommendations · 5 conclusions
Inquiry on parliament.uk ↗

What the inquiry looked at

“This inquiry reviewed Government plans to tackle fraudulent and exaggerated motor insurance claims, particularly for whiplash injuries.”

The committee's words, from the inquiry page on parliament.uk ↗.

What the government said

The government responded on 24 October 2014.

Summary written by Accountability Index from the government's response.

The Government welcomes the Committee's work and sets out its programme of reforms on whiplash and personal injury claims, including measures on medical evidence, dishonest claims and inducements, while giving further consideration to the small claims limit "in due course".

  • On medical evidence, the Government is "currently consulting" on rule changes and "expects the new system" of independent, accredited medical reporting "to be in place by early in the new year", with the ABI meeting the IT start-up costs.
  • On dishonest claims, it points to measures in the Criminal Justice and Courts Bill and says it expects the Bill to achieve Royal Assent "before the end of this Parliament, with commencement to follow shortly thereafter".
  • On the small claims limit, it believes there is evidence to support raising it for personal injury claims, but its focus is currently on implementing the medical reforms, and "further consideration will be given to this issue in due course".
  • On pre-medical offers, it is "attracted to the idea" of a rule requiring a medical report first but says a new rule alone is unlikely to suffice; it has amended the RTA Protocol and will keep the matter under review.

Read the government's response ↗ Read the report ↗ Report an error

How the inquiry ran

Each dot is a dated item listed on this page, from the inquiry's opening on 5 November 2013 to its close on 13 January 2015.

  1. Report 4 Jul 2014
  2. Government response 24 Oct 2014
  3. Correspondence 7 letters

What it recommended 8 recommendations · 5 conclusions

1We reiterate our earlier recommendation that the Government should act to ensure that there exists...
Recommended (the committee's words)
We reiterate our earlier recommendation that the Government should act to ensure that there exists better data about fraudulent or exaggerated personal injury claims, so that there is a stronger evidence base for policy decisions. Since the Government has cited the ABI’s figures for dishonest claims in 2013 it should explain how the figures have been arrived at and how dishonest claims have been defined.
2We recommend that the Government inform us of what work is underway or planned to...
Recommended (the committee's words)
We recommend that the Government inform us of what work is underway or planned to develop adequate safeguards to protect claimants from adverse consequences of raising the threshold for using the small claims procedure for personal injury cases.
3Although we welcome the Government’s obvious desire to get on with establishing independent medical panels...
Recommended (the committee's words)
Although we welcome the Government’s obvious desire to get on with establishing independent medical panels as soon as possible, we are concerned that numerous detailed matters are being decided hastily and, in some cases, without much consideration of different options. We recommend that the Government publish for consultation comprehensive proposals for how medical panels will work, in time for the new system to be introduced by next Easter.
4In our view, medical reporting organisations should be prohibited from providing reports on whiplash and...
Concluded (the committee's words)
In our view, medical reporting organisations should be prohibited from providing reports on whiplash and other soft tissue injuries for claims being pursued by solicitors belonging to the same business structure. Furthermore, a robust accreditation system should provide mechanisms for penalising practitioners whose work is influenced by their view of what the claimant might want in a report. We welcome the Government’s intention to act in this area.
5We recommend that the Government explain how it will prevent small firms being squeezed out...
Recommended (the committee's words)
We recommend that the Government explain how it will prevent small firms being squeezed out by the introduction of independent medical reporting panels for whiplash and related injuries.
6We call on the Government to clarify how and when it intends to introduce measures...
Recommended (the committee's words)
We call on the Government to clarify how and when it intends to introduce measures requiring courts to throw out compensation applications in full where the claimant has been fundamentally dishonest. Although we broadly support this initiative we would caution against hasty legislation: the legal issues need to be fully thought through so that the eventual solution is effective and does not have unintended consequences.
7Inducements to claim are likely to have encouraged fraudulent claims so we support the Government’s...
Recommended (the committee's words)
Inducements to claim are likely to have encouraged fraudulent claims so we support the Government’s intention to ban them. We call on the Government to publish details of how and when this change will be made.
8We are in no doubt that fraudulent and exaggerated claims have been encouraged by the...
Concluded (the committee's words)
We are in no doubt that fraudulent and exaggerated claims have been encouraged by the insurers’ practice of paying out for whiplash claims without requiring a medical examination. We strongly agree with the Government’s intention to prohibit such offers, as part of the new system for independent medical panels for diagnosis and reporting.
9Problems caused by claims for injuries sustained months or years ago could be ameliorated by...
Concluded (the committee's words)
Problems caused by claims for injuries sustained months or years ago could be ameliorated by reducing the period in which claims can be made or by requiring firmer contemporary evidence of the impact of the injury. We have made the case for these changes previously, although the Government has not yet been persuaded. In our view, these changes will be required to make the system work effectively.
10It is unfortunate that the ABI should argue that action to tackle fraudulent and exaggerated...
Concluded (the committee's words)
It is unfortunate that the ABI should argue that action to tackle fraudulent and exaggerated claims, by insisting on medical examinations, will increase premiums. We would have hoped for a firmer commitment from the industry to driving out fraud. In our view, money saved from reducing fraudulent and exaggerated claims should more than compensate for any extra costs resulting from more stringent requirements for dealing with whiplash claims.
11Once proposals for independent medical panels for whiplash injuries have been implemented and shown to...
Recommended (the committee's words)
Once proposals for independent medical panels for whiplash injuries have been implemented and shown to work, the Government should be prepared to extend their scope to other types of injury if necessary. We also recommend that the Government press the Solicitors Regulation Authority to stop some solicitors from playing the system to maximise their income from unnecessary medical reports.
12We expect the insurance industry to continue funding the police Insurance Fraud Enforcement Department in...
Recommended (the committee's words)
We expect the insurance industry to continue funding the police Insurance Fraud Enforcement Department in the long-term: we recommend that the Government oversee IFED’s funding arrangements to make sure that the unit has a long-term future.
13We are pleased to note that better data sharing to tackle motor insurance fraud is...
Concluded (the committee's words)
We are pleased to note that better data sharing to tackle motor insurance fraud is now beginning. We share the Government’s wish to see results as soon as possible, but it will also be important to get the details of the scheme right. In particular, data Driving premiums down: fraud and the cost of motor insurance 21 sharing should be compulsory: otherwise, only the most reputable firms will take part and the impact on fraud will be limited.

Correspondence 7 letters