Scourge of new ‘wrist-lash’ claims pushes car insurance to record high

Car Insurance Whiplash

Securing a hefty insurance payout after an accident was once as easy as saying a simple word: whiplash.

Drivers were able to claim thousands in compensation with minimal proof, driving up costs for insurers which were passed on to consumers. Such was the effect of surging claims on motorists it sparked a government intervention and the introduction of a cap on payouts.

But now insurers say new whiplash-style claims for sprained wrists and bumped knees are once again helping to push insurance premiums to record highs.

The average premium for comprehensive motor insurance rose in price by 25pc over the last year, according to the Association of British Insurers, with some drivers claiming their bills have doubled.

The average cost of annual cover is now close to reaching £1,000 for the first time, according to Compare the Market. Insurers have blamed rising prices on inflation, increasing costs of repairs and increasing thefts.

But Mark Shepherd, head of general insurance at the ABI, said the industry was also now contending with a surge in claims that some have dubbed as “wrist-lash”.

He said: “The whiplash reforms should have reduced the pressure that these claims were having on motor premiums, to the benefit of all motorists.

“However, while we’re seeing fewer whiplash claims, claims for minor injuries – such as bruised knees or sprained ankles – have increased.

“Essentially, it looks as though we’re moving from being the country that had the weakest necks in Europe to the weakest knees in Europe which, if those driving these claims get their way, risks eroding any benefit from the reforms.”

One industry insider said insurers were seeing a return to the days of spurious claims, with claims agencies securing four-figure payouts – in some cases ten times the amount drivers can claim for whiplash injuries.

In many cases, this means a mixed injury will be close to the sum that would have been awarded prior to the whiplash reforms.

He said: “Now that you can only get in the region of £250 for whiplash set by the tariff, people can claim damages up to £2,400 because they’ve been shunted in a car park and hit their knee on the steering wheel.”

Under the 2021 Whiplash Reforms, the amount of compensation paid to victims of whiplash is now subject to tariffs, depending on how long the injury persists.

Claimants can receive up to £260 if they recover within three months, and £520 if they recover in six. The maximum amount of compensation for a whiplash injury is £4,345, for an injury lasting two years.

The Ministry of Justice said at the time the cap came in that the reforms would save drivers £1bn on their insurance premiums.

Figures show that the intervention helped to stem claims. The cost of injury claims settled by motor insurers has fallen by 27pc since the reforms according to the Association for British Insurers (ABI), a trade body.

The industry is now pressuring the Government to introduce similar legislation for other “mixed injury” claims.

In February the ABI lost a test case in the Supreme court aiming to limit payouts for such claims. It said it was “disappointed” with the ruling and claimed the “outcome risks undermining the intention of the whiplash reforms”

A spokesman said: “Motor insurers are doing all they can to keep prices as competitive as possible but this will only increase the cost pressures they’re facing. We’ll work with our members to consider the impact of the judgment alongside the steps we’ve already set out through our 10-point roadmap for tackling motor insurance costs.”

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