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Wednesday 22 February 2017

Getting rid of dodgy whiplash claims is actually quite easy

Published 04/09/2016 | 02:30

'One of the biggest issues with the insurance market is the prevalence of whiplash claims, some of them of questionable veracity'. Stock photo
'One of the biggest issues with the insurance market is the prevalence of whiplash claims, some of them of questionable veracity'. Stock photo

The motor insurance industry is in turmoil - but drivers are paying the price for the mess. What a high price it is, being extracted for the poor management decision-making by insurers, lax regulation, generous court awards by judges, low investment returns and rising level of dodgy claims.

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The 70pc rise in the average cost of a premium is effectively a bail-out for the sector from drivers.

Most insurers are warning of more rises. The market has also been hit by Zenith's plans to pull out of this country, and the collapse of Enterprise Insurance. The number of motor insurance claims due to accidents involving uninsured or untraced drivers jumped by 17pc between January and July, something that will add to the pressure on premium rates.

If the extortionate pricing is hard to stomach for drivers, equally nauseating for motorists is to have to listen to a blame game between insurers and lawyers, with the Government doing little or nothing to alleviate the situation.

The Department of Finance insists it is taking the issue of rising insurance premiums seriously.

An inter-departmental working group on insurance costs, headed up by Minister of State Eoghan Murphy, held its first meeting on July 20. It was not due to have its second until last week - some six weeks later.

So no urgency there.

The department says pricing is a matter for insurers, but the working group may identify measures that will reduce the cost of claims, a move that would reduce premiums.

One of the biggest issues with the insurance market is the prevalence of whiplash claims, some of them of questionable veracity.

Whiplash accounts for 80pc of all the claims made every year. And whiplash claims make up a third of the value of pay-outs, or some €330m.

Most whiplash claims are of course genuine, but the suspicion is that large numbers are not.

In France, just 3pc of claims are for whiplash, compared with our 80pc. We have some very soft necks, or is that hard necks?

The average payout here is €15,000, compared with €5,000 in the UK. Honest drivers are paying for the dodgy claims, with some solicitors appearing to encourage their clients to avoid the Injuries Board, which does not pay legal costs.

One quick and easy way to sort this out would be to replace our system of cash payouts with the provision of care. Britain has legislated to go this "care, not cash" route. What honest claimant could reject such a system?

Mind you, there would be nothing in it for solicitors, which is the point of the exercise.

Sunday Indo Business

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