How can we put an end to fraudulent personal injury claims?

What can the government do about the increasing amount of fraudulent personal injury claims that are pushing up the cost of motor insurance?

Department of Transport figures show a decrease of 10% in the number of RTAs and yet the number of personal injury compensation claims has increased by 43%.

Personal injury solicitors across the UK are dealing with around 1,200 claims for whiplash injuries every day and these are responsible for a large proportion of the increased insurance premiums. It costs the NHS around £8 million every year to treat people with genuine whiplash injuries and yet insurance companies are forking out about £2 billion a year in compensation awards.

The no win no fee system has encouraged a compensation culture where unscrupulous people will file a claim for just about anything because they have nothing to lose.

Last year, the MoJ implemented a new procedure for dealing with low value motor injury claims, i.e. those valued at less than £10,000. They also set fixed fees for the legal costs incurred. For example, a personal injury lawyer earns a fixed £1,350 on a £2,500 whiplash claim. With such a large fee beckoning, it’s hardly surprising that lawyers are continually on the lookout for new clients.

This in turn has led to an increase in the number of claims management companies that sell victim’s details to lawyers. Some companies, including AXA insurance, are calling for an immediate ban on these referral fees, but will that stamp out the compensation culture?

A few years ago in Ireland, the government took the lawyers out of the equation and the cost of motor insurance premiums dropped by 16% within two years. Should the British government do the same?

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