With 93% of GPs seeing patients they believe to have exaggerated injuries in order to make a claim, Leigh Jackson asks how insurers can stem the rising cost of whiplash cases.
The majority of insurers, especially large composites, have grown used to eyeing their motor books with suspicion in recent years. Premium prices have increased to at least offset – if not keep pace with - claims cost inflation and the prevalence of neck injuries is becoming a primary concern.
According to 2008 research by the Association of British Insurers, 20% of every motor premium – £66 on average – is paid out against whiplash claims, totalling £1.9bn each year. Over the past two years, this issue has not abated, with insurers seemingly more convinced that a large majority of these injuries are at best exaggerated or at worst non-existent.
Writing in Post at the turn of the year, Laurent Matras, Groupama Insurances managing director, drew attention to the incongruous relationship between current road safety and whiplash frequency. “The total number of accidents on the UK’s roads is falling. We’re driving safer cars. But whiplash is on the increase,” he said.
“You might think medical experts should weed out those who are faking or exaggerating. But while the medics might be puzzled by the extent of non-demonstrable symptoms and the ineffectiveness of rehabilitation, it is not their job to question the extent of a patient’s declared pain and disability. In other words, and unlike in most civil disputes, whiplash claimants can be compensated when there is no hard evidence of the extent of their pain and suffering.”
Research by fellow insurer LV last year backs up Mr Matras’ concerns. The study revealed that 93% of GPs had seen a patient between 2008 and 2010 that they thought was exaggerating their injuries in order to make a compensation claim.
But has there been an increase in fraudulent claims? And has the supposed surge reached its natural peak? Andy Pagett, counter-fraud manager at Groupama Insurances, believes the worse could be yet to come. “The surge will definitely continue especially in the current economic climate,” he says. “Moving through 2011, the number of redundancies could put the pressure on and really push the compensation culture further.
“This is something that we have arrived at during the last 30 to 40 years where people feel entitled to compensation. Whiplash wasn’t even a term used in the UK until the 1980s.”
An upward trend
The Groupama line on whiplash also meets with agreement from the legal profession. Pamela Davies, director of motor fraud at Keoghs, explains. “Our experience as lawyers shows us these sorts of cases are on the increase. We deal with a lot of cases where the impact between the vehicles occurred at a low speed and the contention is that the person has not been injured or has exaggerated their injuries. The trend is certainly upward â in fact, we saw a 22% increase in low-speed impact claims in 2010.”
Some insurers point to the relationship between accident management firms and personal injury law firms as a cause for the claim increase and a reason to be pessimistic about any decline in the near future. Martin Milliner, technical claims director at LV, says that forthcoming legislation â in the form of the Legal Services Act and its introduction of alternative business structures â to allow more companies to provide legal advice could lead to a further spike in whiplash claims.
“Is it possible to generate more soft tissue injury claims than we have already have?” Mr Milliner asks. “The situation is nearing a high watermark but before there is any sign of retreat the alternative business structures, which will come to the fore this year, will see lawyers partnering closely with accident and claims management companies, perhaps more than they are today. This is bound to push up the level of whiplash claims.”
Insurers agree this phenomenon needs to be tackled but many believe they are almost powerless to stem the surging whiplash tide. Karl Helgesen, motor claims director at Zurich Insurance UK, believes that government intervention to help speed up claimant payments, such as the Ministry of Justice electronic portal for motor claims, has had unintended consequences for underwriters.
“The introduction of the MoJ process has helped in some ways, as we get greater information up front at the point of notification. This helps us take a tough line with claims that we suspect are fraudulent,” he says. “However, the reality is insurers are walking an economic tightrope and we have to balance the resource for investigation against the prospects of success.”
Tony Walton, senior partner and head of Berrymans Lace Mawer’s motor team, claims insurers are now less able to tackle whiplash head on because of the stringent timeframes imposed under the MoJ regime. “The RTA portal is designed to get money from the insurer to the claimant quicker than ever and it cuts out any realistic possibility of fighting on the beaches. It does the opposite to that.
“We need to create awareness of the fact that much of the diagnosis of these injuries is based on a presentation by an apparently plausible claimant and there isn’t any pressure to see whether the problems are as bad as they seem.”
However, others stress that insurer efforts to tackle fraudulent whiplash should not prevent truly injured claimants from gaining compensation. Susan Brown, director at Pro Legal, claims that technology used alongside the MoJ reforms, is forcing some claimants to abandon their day in court.
“The number of cases where the issue of ‘causation’ or ‘low velocity impact’ has been raised has increased significantly since the introduction of the new rapid claim process last May,” she says. “Insurers are now effectively using this as a tool to deter genuinely injured victims who are worried about not being believed in court and run the risk of losing indemnity from their legal expenses insurance and becoming personally liable for costs.”
While insurers concede they have limited means to tackle a rise in whiplash claims, the same cannot be said of medical experts. With claimants relying on medical reports detailing the extent of their injuries, it has been argued that a more stringent line should be taken by GPs and medico-legal reporting firms to ensure that fraudulent claims are dealt with at source.
“It would be nice to think that medical experts could do more to challenge claimants but the general view seems to be: if a claimant says he has neck pain, he has neck pain,” says Nigel Teasdale, a partner in the motor claims team at law firm DWF. “This is in the face of research suggesting 93% of GPs believe patients may be exaggerating their injuries.”
Mr Milliner explains that handsomely paid medical specialists are sometimes unable to produce injury reports free of bias and are, therefore, jeopardising their duty to the court. “One area that hasn’t had much debate is the referral fees and retrospective rebates that occur between the medico-legal arm of the process and those instructed,” he says.
“We need to look at how the medico-legal arm reacts within referral fee structure and the rebates that come out of those fees with medico-legal reporting.” He adds: “We should be having discussions with medico-legal firms about their fees but should also look at the conflicts that exist between those that instruct experts and the expert’s duty to the court.
“Insurers have a part to play in redesigning how injuries are assessed, who assesses them and restoring the independence of the medico-legal process. It can’t be right that claimant law firms have a medical interest in the bodies that are producing the reports.”
Impartial assessment
Weightmans motor claims partner Charlie Jones says one way to ensure experts are impartial is to implement a court-appointed pool system, as first mooted by Lord Woolf as part of his access to justice reforms more than a decade ago. “Under his original ideas, experts, including medical specialists, would have been chosen from a pool of experts on the court register,” he says. “They would all be trained, updated regularly and need regular assessments. Unfortunately, that could only be done at considerable expense.”
Others urge the government to do more to curb the specific issue of spurious whiplash, including a call for a detailed implementation of Lord Justice Jackson’s costs reforms. “Lord Jackson’s recommendations include a number of steps that would introduce an element of financial risk for claimants and lawyers; this could lead to a reduction in unmeritorious claims,” says David Powell, underwriting manager at the Lloyd’s Market Association.
“Almost everyone you talk to has an anecdote about a low-speed prang in a supermarket car park that led to a frenzy of text messages, phone calls and e-mails from claims management companies and lawyers, encouraging a claim in search of income.
“Lord Young was referring to this activity when he made the important differentiation between ‘access to justice’ and ‘incitement to claim’. Greater control and regulation of the claims farming industry could reduce fraudulent claims, with the savings passed on to customers.”
Pleas for government to take a closer look at this problem have extended to taking a continental approach to whiplash claims. In Germany, for instance, courts use biomechanical evidence to assess whiplash and will not acknowledge injury where this evidence shows the collision alleged to have caused the injury involved speeds below 10km per hour.
“This is worthy of serious consideration,” Mr Powell continues. “In Germany, the judiciary has taken a pragmatic decision to decline compensation where an accident occurred at a very low speed, given that in most cases these accidents will not cause an injury.
“We are talking about very minimal force, such as that generated by sitting heavily into a chair, or heading a football. Removing these claims from the system would undoubtedly reduce costs, fraud and waste, and we would welcome a serious debate on this issue.
“These claims are especially problematic in the UK, where the civil law threshold for proving soft-tissue injury is so low; a medic merely has to confirm that their patient reported pain following an accident, and that in their opinion the accident was the cause. Such claims are very difficult to defend, even where it is almost certainly fraudulent, if the witness appears credible.”
However, with the German concept taking a strict non-individualistic approach there are concerns about the effect that such a method would have on individual cases. As Mr Jones concludes, any changes to the way whiplash is approached must take into account that, even if many cases are fraudulent, not all soft-tissue neck injury claimants are exaggerating their injuries.
“The government can adopt the attitude taken in other countries,” he says. “The trouble is, in this country, there might be an outcry. Not so much from claimants but from the other people who benefit from the business, such as solicitors. Until you have medical evidence that can provide proof of there being little or no damage in low-speed impact cases, there will always be medical experts that can argue against it.
“It is different from a case of a broken arm, which is objective; this area is very subjective. It is difficult for an expert to dispute the existence of injury and prove otherwise. And many claimants will have genuine injuries.”
The technology solution
Motor insurer research repair centre Thatcham has been examining the issue of car safety and whiplash claims for several years. In 2008, it began developing Wit Kit â the whiplash injury toolkit, designed to provide a probability of neck or whiplash injury for specific scenarios involved in certain accidents.
Andrew Miller, director of research at Thatcham, details current and new car technology that could help prevent neck injuries in vehicle collision. “In some higher level cars, manufacturers have installed active restraints. Those are some of the best practices for controlling whiplash we have. We will not see big improvements in future, they will be more incremental.
“However, the biggest revolutionary change will be active safety collision avoidance technology, which breaks the car automatically before it strikes another car. Volvo and others launched this in 2009, and a second version with pedestrian avoidance technology will be launched this year on the S60.
“From our discussions with insurers, whiplash is a complex problem. If consumers buy the best seats, ensure the seat performs well under a crash test, and make sure an adjustable head restraint is placed in the most appropriate position, that would ensure whiplash is unlikely to occur in low speed impacts.”
Source: Claims Standards Council
