Whiplash under spotlight as MPs launch second inquiry

Whiplash claims have spiralled to 550,000 a year in Britain, even though road accidents have dropped. Up to £2,500 of every claim goes to lawyers and claims management companies, insurers say. Photograph: Alamy

MPs are launching a new investigation into how to cut the number of whiplash claims, to make car insurance cheaper. The Transport Committee is calling for evidence on how whiplash costs – which add around £90 to every motor premium – can be reduced.

But the committee was criticised for launching its investigation at the same time as a previous government inquiry into whiplash is about to be published.

The Transport Committee called Britain "the whiplash capital of the world" and said it wants to establish what proportion of costs are caused by people faking their injuries – whiplash is notoriously difficult for GPs to diagnose. MPs will also look at the likely impact that clamping down on exaggerated claims would have on people who are genuinely injured.

The number of whiplash claims has spiralled to around 550,000 a year, or 1,500 a day, landing insurers with a compensation bill of £2bn. Insurers argue that much of the money – up to £2,500 for every whiplash claim – is wasted on legal fees and payments to claims management companies.

Britain's whiplash industry is now pushing up the cost of the average motor insurance policy by a staggering 20%, according to the Association of British Insurers (ABI). From 2005 to 2010, whiplash claims soared by 70%, even though road traffic accidents fell by 23%.

Louise Ellman, chair of the Transport Committee, said: "It is vitally important for policymakers to understand the reasons for the very high cost of motor insurance, especially for young drivers, and to take steps to bring that cost down. Whiplash claims undoubtedly play a part in driving up the cost of motor insurance, but access to justice for injured people must be preserved."

But Simon Douglas, director of AA Insurance, questioned the timing of the Transport Committee's investigation, coming just as a previous government inquiry into whiplash has ended. He said: "It seems odd that it has taken a year to announce this inquiry, at a time when a separate Justice Ministry inquiry appears to have covered similar ground.

"While there is clearly a need to bring the escalating number of often-spurious claims under control, there are steps that could usefully help – for example, fixed rates of compensation and a proportion of claims payment withheld and paid direct for treatment, such as physiotherapy. Similarly, historic claims should reflect the cost of treatment that sufferers have, or should have, undertaken."

The AA favours the system used in Germany and Austria, where collisions below a certain speed (assessed by expert analysis of vehicle damage) are deemed to be too low to result in whiplash injury – around 70% of road accident personal injury claims are for whiplash in the UK, compared with 47% in Germany.

Earlier this week, insurers called for people making a whiplash claim to be forced to undergo medical examinations by independently-appointed experts to cure the UK's "epidemic" of cases. The ABI wants to see all whiplash cases dealt with by medical professionals who have been accredited by a special board in order to curb the flow of claims.

The organisation added that anyone whose whiplash claim turns out to be even partly exaggerated should automatically have their whole case thrown out.

James Dalton, assistant director of motor and liability for the ABI said: "Whiplash has come to mean 'whipcash' for too many people, with all motorists paying the price through higher motor premiums. Our 'have a go' compensation culture makes whiplash the fraud of choice for too many.

"Our proposals to curb the UK's whiplash epidemic will ensure that claimants are independently assessed, compensation paid to genuine claimants more quickly, and deter anyone who thinks that claiming whiplash is free money waiting to be collected."

The Transport Committee will look at whether the government could be taking further action to reduce the cost of car insurance and wants written submissions by 15 April.

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