Earlier this year David Cameron announced the UK as “the whiplash capital of Europe” and vowed to tackle the rise in whiplash claims. With statistics indicating a discrepancy between the amount of road traffic accident injuries and road traffic accident compensation claims whiplash has now become representative of “dodgy PI claims” in our collective consciousness, but is this reputation justified? Are there that many fraudulent claims going on?
Whiplash’s bad rep
A report by the Institute and Faculty of Actuaries indicates a real discrepancy between police data and personal injury claims made to insurers from 2006 to 2011. Police figures show a 20% decrease in the number of accidents involving injuries whilst statistics show a 40% increase in third party injury claims. It’s estimated that about 554,000 whiplash claims were made in 2010-11.
These kind of statistics, taken at face value, suggest that fraudulent claims might be going on. Indeed, APIL have called for a “truth statement” to be signed by the claimant and solicitor in an attempt to oust the phenomenon of making a fraudulent whiplash personal injury claim in the profession and protect genuine claimants. That being said, 80% of whiplash sufferers report their symptoms accurately or underplay them. Indeed, in the past 12 months whiplash-related claims have actually fallen by 24,000 according to APIL research so whiplash’s bad reputation arguably comes more from media portrayals than anywhere else.
The underworld of PI – referral fees and Insurers
Although the insurance industry has bemoaned the increase of premiums as a result of increased whiplash claims, they have a huge part to play in our “whiplash nation” because of one thing – referral fees. Here’s a quick guide to how referral fees work; keep in mind that whiplash claims are pretty easy to win so in some sense are seen as “easy money”.
Quick guide to referral fees:
- Insurance companies have details of whiplash accident victims
- Whiplash claims are easy to win and mean a good amount of profit for law firms
- To the extent that some law firms and CMCs will pay money to get details so they can win cases
- Insurance companies therefore sell details of victims and gain referral fees in exchange
This practice isn’t illegal but it’s certainly a bit dubious, especially when insurers can sell your details for up to £1000. The practice itself comes under the remit of ‘Legal Expenses Insurance’ or ‘Motor Legal Protection’. A rise in whiplash claims then or personal injury claims is due far more to encouragement as a result of referral fees than fraudulent claimants. Indeed, we’ve all seen the forceful marketing tactics used by CMCs all over our tv screens, on the radio and on the internet. Many of us receive direct messages about accidents we’ve never have. It seems the industry itself then is perpetuating its own problems. Although referral fees have now been partially banned by the government they are not strictly illegal and some form of referral fees can still take place.
Many, many law firms see referral fees as unethical and going against the very spirit of personal injury law. For this reason they won’t be involved in paying for referrals. Accident Solicitors Direct is one of these smaller firms who offer another way of getting compensation you are legally entitled too without getting embroiled in unethical tactics. The only kind of referrals we accept are from former clients.