Claims management companies (CMCs) should be banned tomorrow according to the Chief Executive of the Law Society.
Desmond Hudson was giving evidence in front of the House of Common Transport Select Committee when he called for the ban, stating that CMCs were not lawful. The committee is currently investigating how much a recent increase in whiplash claims is adding to insurance premiums for UK drivers.
Mr Hudson was suggesting that whiplash victims should not be compensated but was arguing that CMCs were encouraging claimants to exaggerate their injuries and make false claims.
Both Hudson and Andrew Ritchie QC who joined him in giving evidence rejected the idea that the UK has become a hotspot for whiplash claims, suggesting that the number of personal injury claims for whiplash is in fact proportionate to the number of road traffic accidents each year.
Ritchie claimed that the STATS19 database used by the government for their statistics did not give an accurate picture. The database focuses on accidents which were reported to the police however it is estimated that the vast majority of minor accidents are not reported to police therefore making the figures wildly unrepresentative.
Many of the whiplash injuries generating claims are sustained in low speed accidents and Craig Budsworth, Chairman of the Motor Accident Solicitors Society, claimed that this is explained by Britain’s overcrowded roads. No country in Europe has a lower average driving speed than the UK which perhaps explains the high number of low speed crashes.
On the question of regional trends for fraud, insurance giant Aviva’s Claims Director Dominic Clayden claimed that there was an inextricable link between cash-for-crash cases and the prevalence of CMCs.
The average insurance premium in the UK now stands at £440 and James Dalton, the Assistant Director of the Association of British Insurers claimed that the rise in whiplash claims was responsible for £90 of that figure.
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