The government this week announced that it would introduce independent medical panels to assess potentially fraudulent whiplash claims. This is a distinct improvement on the idea that floated just before February's insurance industry summit; a minimum collision speed threshold of 15 mph.
While such a threshold would have prevented some of the fraudulent claims that contribute to the £2bn-a-year whiplash bill from being made, it would also put genuine claims at risk of being dismissed on a technicality. It's a good thing they're investigating alternatives.
Why the 15mph Threshold was Suspicious
In March, Watch My Wallet - the independent money saving website that I write for - interviewed Graham Oakley; a former traffic officer and independent collision expert, about the mechanics of whiplash and whether the proposed minimum speed was appropriate. He said:
"Safety air bag systems and seat belt pre-tensioners are designed to activate in a frontal impact but not before certain pre-determined factors occur. Manufacturers don't want expensive-to-repair air bags going off as a result of a heavy bump up a kerb, for example.
"That threshold figure is not easily determined and might vary between different makes of vehicle. I understand a range of 10 - 15 mph are likely ball park figures and if that is correct it is uncomfortably close to the Government figure of 15 mph. I can see claims being disputed solely on whether or not an air bag was triggered.
"It is not possible to assess an impact speed with such accuracy. A medium to high speed collision is obvious to most people due to the extent of vehicle damage or post impact movement.
"However, I don't know how anyone could differentiate between a 9 mph and 11 mph impact unless there was some very sophisticated 'black box' recorder on a vehicle."
No consumer groups were invited to February's insurance summit. In fact, it was criticised at the time for looking like a lobbying opportunity for the insurance industry.
As well as pressing the Government to help them reduce the amount of frivolous claims they dealt with, the insurance industry committed to lowering premiums in return. It is estimated that each motorist pays £90 extra to cover the cost to the industry of fraudulent whiplash claims.
No More Referral Fees
The Government has also pledged to ban referral fees, a move which comes into force in April 2013, alongside a rebalancing of no-win no-fee deals so they no longer require the losing party to pay a fee to the winning lawyer.
The typical referral fee paid by personal injury solicitors for a whiplash claim is £800. The insurance industry makes millions every year from referring their own customers to personal injury lawyers when they are involved in a non-fault accident, often without their knowledge. So the industry stands to lose money here. Hopefully this will not impact on the savings the industry has promised to pass on to customers.
Personal injury claims have increased by 60 percent over the past six years while accidents have reduced by a fifth, but this doesn't necessarily mean that the increase is purely due to bogus claims. Personal injury lawyers advertise a lot more aggressively, the referral process is much quicker and it is generally much easier to claim. Of the estimated 1,500 daily claims, there are doubtless some bogus ones, but it's essential that genuine whiplash victims aren't stigmatised or prevented from making a compensation claim.