20% of your car insurance premiums pay for whiplash claims

07 March 2013 / by Isabel Buxton

A new report by the Association of British Insurers (ABI) indicates that personal injury claim costs now make up the largest proportion of car insurance claim costs, with whiplash claims alone accounting for 20% of premium income. The study analysed where the premiums paid by the UK’s 23.5million motorists were spent, and found that that while just under 30% of claims are paid out on repairs and replacements, this is closely followed by whiplash claims at 20%.

Fraudulent claims cost each driver £90

Despite the fact that the number of vehicle accidents reported to the police is falling, the UK sees over 1,500 whiplash claims every day. While some are genuine, the fact that there’s no medical test or diagnostic criteria for whiplash injuries means that unfortunately, dubious claims are likely to make up a proportion of these reports. These claims come at a cost to customers of more than £2 billion a year, and add around £90 to each driver’s car insurance premium.

Making changes to bring down premiums

In an effort to combat fraudulent claims, the Government is proposing measures that will allow insurers to challenge claims they think are fraudulent, without facing high legal costs. The Ministry of Justice is also consulting on changes to the medical evidence used in personal injury claims to ensure more independent evidence is used.

Nick Starling, the ABI’s director of general insurance, said: “Despite rising costs linked to excessive legal fees, and whiplash, insurers are determined that customers get the best insurance deal. That is why the industry has successfully lobbied government to introduce reforms to streamline the compensation system and drive down inflated legal costs and is urging action to tackle the whiplash epidemic, which if implemented will significantly reduce their insurance premiums.”

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Written by Editorial Team