Desmond Hudson, the Chief Executive of the Law Society, has appealed to politicians to prohibit Claims Management Companies (CMCs).
An investigation is currently underway by the transport select committee into the effect that a high number of whiplash compensation claims is having on the cost of motor insurance. Speaking to the committee, Mr Hudson insisted that CMCs should be closed down at the earliest opportunity.
According to Mr Hudson, claims management companies have encouraged dishonest claimant to defraud the system and exaggerate their injuries. Although he stressed that those with legitimate claims should be given fair compensation payouts, he explained that the aggressive marketing of claims was to blame for abuse of the system.
The argument often given by insurance companies is that Britain has become the world’s ‘whiplash capital’ however this was disputed by Mr Hudson. Indeed, Andrew Ritchie QC who joined Mr Hudson to give evidence stressed that the road accident statistics for the UK clearly demonstrate that there is not a disproportionate number of whiplash claims.
The government uses figures from STATS19, a database containing figures for the accidents on public roads which involve human injuries or fatalities and are reported to police. However, Ritchie stressed that these figures were inaccurate given that minor incidents are rarely reported to police and the real figure could therefore be 2 or three times higher.
According to the Chairman of the Motor Accident Solicitors Society Craig Budsworth, congestion is to blame for the high number of low speed collisions resulting in whiplash injury compensation claims. Britain has the lowest average car speed of any country in Europe and as a result small incidents are more common.
Aviva UK’s Claims Director Dominic Clayden stressed that CMCs and cash-for-crash cases were clearly linked. James Dalton of the Association of British Insurers added that the prevalence of whiplash claims was making insurance premiums £90 more expensive on average.
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