MPs have called for compulsory sharing of information on fraud in a bid to clamp down on exaggerated or fabricated insurance claims, criticising ‘slow’ progress in enabling insurers and solicitors to share such data.
In its fourth report on the cost of motor insurance premiums published today, the House of Commons Transport Committee also calls for cash inducements for claims to be banned – a move already planned by the Ministry of Justice – and for a ban on insurers offering to settle whiplash claims before the claimant has undergone a medical examination.
There is also a warning that new evidence had revealed new forms of ‘potentially dishonest practice’ have emerged, such as ordering additional medical report on psychological harm arising from road traffic accidents.
The report says: ‘The government should press the Solicitors Regulation Authority to stop some solicitors from playing the system to maximise their income from unnecessary medical reports.’
The Association of British Insurers suggested that separate psychological reports were ordered in around 2% of whiplash, neck and back injury claims, twice as many as before 2011.
The report notes that in 2010 average quoted premiums were increasing at an annual rate of more than 30%. But in more recent times, average premiums have fallen back. According to the AA, average quoted premiums fell by 16.6% in the year to March 2014 and are now lower than at any time since late 2010.
The committee says the government should act immediately to ensure better data exists about fraudulent claims, and calls on ministers to ask how the ABI had come to the conclusion that almost 60,000 ‘dishonest’ motor claims were made in 2013.
But the insurers are blamed in part for encouraging fradusters to make claims through their practice of pre-med offers.
‘We are in no doubt that fraudulent and exaggerated claims have been encouraged by the insurers’ practice of paying out for whiplash claims without requiring a medical examination,' the report says. ‘We strongly agree with the government’s intention to prohibit such offers, as part of the new system for independent medical panels for diagnosis and reporting.’
The report urges caution on government plans to reduce whiplash claims. It warns of policies being ‘decided hastily’ on both independent whiplash panels and on throwing out claims where dishonesty has been proved.
The MPs also urge the government inform them of what work is underway or planned to develop adequate safeguards to protect claimants from adverse consequences of raising the threshold for using the small claims procedure for personal injury cases.
The report adds: ‘The government must continue to engage with all interested parties, rather than just with the insurance industry, as has been the case in the past. It must all make sure that its reforms lead to a sustainable reduction in motor insurance premiums, which must not be allowed to bounce back to the extraordinarily high levels of the turn of the decade.’