There are an estimated 550,000 whiplash claims made each year, many of them for amounts less than £5,000. Yet for each £1 paid out in compensation the insurance industry (at least Aviva) claims that another 82p has to be found to meet the costs of middlemen lawyers and claims handlers.
Such is the scale of this ‘industry’ that an average of £118 a year is piled onto to each motoring policy to pay for it.
Now Aviva wants to cut out the middleman and see a change in the law that would mean drivers seeking compensation have to go straight to the insurer of the at-fault driver.
Aviva says that all motorists benefit because of lower premiums. It also insists – going by current experience – that the size of payout for a legitimate claim would be the same, perhaps slightly higher, than one obtained by the help of independent lawyers. What they didn’t quite answer when I spoke to Aviva was whether the overall number of payouts would fall because either drivers were put off going straight to an insurance company (also, Aviva couldn’t completely explain how the process might work – would it literally involve an injured party themselves writing to the at-fault driver’s insurer?) or because they lack the legal knowledge to ask for what they are entitled to.
A second strand of Aviva’s plan involves the establishment of an independent medical panel to check the validity of claimants’ cases. This will draw some sympathy from drivers who have been victims themselves of what the ABI calls the “fraud of choice” for too many people.
The risk of this approach is that another layer of cost and bureaucracy will replace the one that Aviva is looking to remove.
But for any driver struggling to meet the high cost of motoring – not least insurance – these proposals should be discussed. Though one wonders if this is such a good idea why it hasn’t been suggested before?