The Financial Times has recently revealed that there is a broad geographical disparity in supposed whiplash injuries, with twenty times more claims for compensation per capita in Liverpool, Oldham and Uxbridge than in some other areas of the country.
Personal injury lawyers have offered the suggestion that regional differences in accident figures were the reason for the differences but insurers claim that this is one of the most obvious signs so far of fraudulent claims.
Ministers have promised to put an end to Britain’s alleged compensation culture and have identified whiplash injuries as one of the greatest problems. They soon plan to put an end to referral fees, which, it appears, some personal injury law firms offer to insurers so that they get access to the contact details of victims of accidents.
Whiplash takes place when the head jerks suddenly in a forward, backward or sideway motion, and causes damage to ligaments and tendons situated in the neck. It is particularly hard to diagnose and doctors usually have to depend on a patient’s actual description of the accident and the symptoms.
The data indicates that 9 out of the 10 postal districts with the least number of whiplash claims for compensation per capita were found in Scotland. The Scottish legal system has far stricter controls regarding referral fees. In Edinburgh and Dundee there were as little as 3 claims per 1000 residents last year but in the same period there were 21 in Uxbridge and 22 in Liverpool.
The whiplash statistics were obtained under the freedom of information laws from the Department for Work and Pensions by the investment group Exane BNP Paribas and indicate a 4% annual fall in countrywide claims to 543,000. Insurers have said that fewer accidents have taken place as the recession has meant car users are not driving their cars so frequently.
Insurers have stated that they would like to dispute more claims but the legal fees encouraged them to finalise a settlement out of court. Ministers have made a pledge to place a cap on the fees for all personal injury claims.
However, a spokesperson for a leading solicitors’ firm has said that though there might be some false claims, properly representing people should be a priority.
Insurance companies have responded to the regional differences in whiplash claims by hiking premiums, especially in those areas. They are subsequently facing criticism for adjusting premium rates based on regions.
Jack Straw, who was once the justice secretary in the previous Labour government, and led a campaign against the use of referral fees, has now asked insurers to stop fixing premiums on postcodes.
The Labour MP emphasised that the social costs of inflated insurance premiums were quite serious as they restrict people’s mobility if they are unable to afford to run a car.
However, insurers’ answer to this is that they fix the rates on the basis of risk.