Last month, the Court of Appeal handed out a judgement in response to a legal test case which provided some clarification to the way insurers calculate compensation for mixed personal injury motor claims.
This is an update to 2021’s Whiplash Reforms, which set limits for whiplash compensation, with the aim of deterring fraudulent or exaggerated claims.
The recent judgement means that if a claimant claims for two different types of injury under one claim i.e. whiplash, which is capped, along with an injury that isn’t capped, such as bruising to the chest or a strained wrist, the different injuries will need to be valued separately, consequently, non-capped injury claims are highly likely to become more expensive.
Potentially, as a result of this change, some solicitors may encourage claimants to take advantage of the new ruling and claim for a mix of injuries rather than just whiplash in order to inflate their pay-out. This could increase the number of fraudulent or exaggerated claims.
Allianz, along with other insurers, have always tried to contain claims costs as a way of protecting Policyholder premiums and this is also what the government set out to achieve with the introduction of the Whiplash Reforms. In their view it remains the right approach, especially at a time of such high inflation.
Many insurers, including Allianz, will monitor the impact of the ruling but they expect to see an increase in mixed injury claims that will potentially eradicate any benefits from the Whiplash Reforms. They will continue to adapt their data and fraud strategies to help contain increasing claims costs.
Insurers recognise there’s a wide variety of factors currently impacting motor claims inflation and these changes are likely to make the situation worse.
We therefore encourage all motor customers to report a loss as soon as possible as this is one of the ways that helps insurers contain costs and deliver a smoother customer experience. Your support in proactively managing third parties will also help insurers to reduce the risk of claims layering.
Credit: A huge thank you to Allianz for sharing this update with us.