Fewer Accidents, More Injury Claims

Statistics in the Institute and Faculty of Actuaries’ annual report has found that the number of road accidents and car damage claims in the UK declined last year. This is great news, but the number of personal injury claims jumped 18%.

The figures show that claim rates in certain areas of the north west have overtaken some of the worst spots in the US. It also revealed that the number of road accidents resulting in third party claims fell 11% last year compared to the year before. The Institute says this was mostly due to motorists driving less because of the high cost of petrol and a reduction in non-essential trips.

The annual report found that payouts are up an average of 9%, while there seems to be a direct connection between where claims management firms operate and where the highest number of claims are filed. Last year, most personal injury claims were made by people in north west England. This area overtook the worst regions of the US in relation to the proportion of accidents involving bodily-injury claims.

Hotspots for whiplash claims include areas of East London and cities like Birmingham, Oldham Liverpool, Wigan, Sunderland and Manchester. In Liverpool, 52% of third party accidents involved personal injury claims, while Manchester had 46% and Birmingham had 39.2%. By comparison, the worst state in the US was Louisiana, at 38.8%. On the other hand, the smallest number of claims were made in Kingston upon Thames, Dorchster, Aberdeen, Exeter and Cambridge. The region with the least number of third party claims was Scotland, which has a different legal system.

Since 2010, insurance premiums have skyrocketed 40%, and motorists have been warned that prices will rise more so insurers can pay for their increased claims bills. Payouts for whiplash claims have added £90 to individual premiums over recent years, while the latest rise in claims has added another £55. The year-on-year increase in personal injury claims is adding about £400 million to the costs paid by insurers. The Confused.com/Towers Watson Index shows that premiums have risen 61% for drivers over just the last five years.

The Association of British Insurers (ABI) says it’s hard to say how much prices will rise, but there’s no doubt the increase in claims will have a knock-on effect for prices. The system is clouded with too much fraud, it added. Transport Secretary Justine Greening described the UK as the whiplash capital of the continent earlier this year. She said drivers have been making claims for even the most minor incidents.

Meanwhile, the government has proposed that referral fees be banned. Referral fees are when insurance firms sell the details of personal injury clients to claims lawyers. The legislation is expected to affect the way claims companies operate, and Institute and Faculty Actuaries chairman David Brown says this large increase in personal injury claims may have been the companies’ last push for profits. The rise in costs to insurance firms will likely mean an increase in motor insurance premiums for motorists.

Brown added that the clear parallel between bodily injury claims hotspots and claims management office locations indicates the two are interlinked. The worst areas of the UK in 2010 overtook the worst areas of the US in relation to proportion of accidents involving personal injury. It’s disappointing that this trend has, not only continued, but has worsened in all regions – except Scotland.