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New whiplash claims probe announced by MPs

Chris Grayling of the Ministry of Justice

There will be a new inquiry to determine how to cut the number of fraudulent whiplash claims whilst ensuring genuine victims of road accidents can still get the compensation, MPs have announced.

The new whiplash inquiry will be led by the House of Commons transport select committee but will begin later this year.

Labour MP for Liverpool Riverside told the Association of British Insurers (ABI) conference on motor insurance that the committee members met to decide on the inquiry and that insurance companies would have to explain why they do not challenge more claims they believe to be fraudulent.

She said: “In the rush to get rid of fraudulent claims we shouldn’t dismiss the possibility that people have a genuine injury.”

With all of the changes currently going on this offers small hope for the personal injury sector who are about to see the way they operate completely reformed and will lose 58% of their fixed recoverable costs from the end of April, after the changes of Legal Aid, Sentencing & Punishment of Offenders Act (LASPO) have been introduced.

There is also uncertainty regarding the future of the small claims limit and consultation on the government’s plans to raise the limit to £5,000 closes today.

Surely there is an argument that these changes should not be implemented until after inquiries like these have taken place so that the government can make better informed decision on how to keep the claims process fair for genuine accident victims whilst at the same time bringing an end to fraudulent claims.

What is even more concerning is that the proposals for change to the way whiplash claims are handled have been made and implemented on the notion that it will help bring down the cost of motor insurance premiums for consumers. Something that has already been thrown into doubt by the insurers themselves.

John O’Roarke, who is the managing director for one of the UK’s biggest insurance firms, LV has warned consumers not to expect vastly reduced premiums. He said: “I expect a 3% reduction in premium, but generally we have already seen some reductions in premiums of 12% and I am not hopeful there will be much more to come.”

He went on to claim that 50% of whiplash claims were exaggerated or fraudulent and said that if this number could be reduced there would be further savings of around 15% on premiums in the future.

When Chris Grayling announced that he would be going ahead with proposals to slash the amount of fixed recoverable costs rewarded on RTA Portal claims he heralded this as great news for the consumer as it would reduce the costs of their premiums.

Now the insurers are saying it won’t which surely begs the question? Where is the money the insurance companies are saving going?

The answer is more than likely to be where it always goes, in their back pockets leaving not only the genuine claimant out of pocket due to the lack of quality legal advice they can now receive, but the consumer as well.

Image source(s)

1. The Guardian; http://www.theguardian.com/politics/2013/sep/05/chris-grayling-announces-legal-aid-reform-u-turn-politics-live-blog

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