The British are in the process of learning a lesson that we learnt the hard way a decade ago. Their system for motor insurance is riddled with fraud and exaggeration. Levels of compensation are far too high and claims too frequent.
A committee of the House of Commons produced a report on the subject last week. They were encouraged along in a painfully slow process of reform by our colleagues in AAUK.
Our neighbours have one the safest road systems in the entire world yet the cost of motor insurance is double what it is here. In fact the British government has declared the UK to be the ‘whiplash capital of the world’.
That is a title that we used to hold and I am only too glad that this is not the case any longer.
Whiplash is a genuine injury and not to be trivialised. But the problem is that it can be very difficult to gauge accurately. Medical professionals will tell you that being precise about the extent of a whiplash injury is tricky even when everyone is acting in good faith.
It is obvious that in Britain at the moment not everybody is. A rear end shunt could hurt me but it cannot be happening with the frequency that it is for genuine reasons. If you get a very high proportion of ‘victims’ suffering from whiplash, migraines, vertigo, loss of libido and post-traumatic stress you have to face the likelihood that you are being scammed.
I know from conversations with professionals like physiotherapists that it can be deeply frustrating. Here’s someone ostensibly hurt in a crash who is basically claiming to have any ailment that you cannot prove he doesn’t have.
He will present to the physio and even though they might strongly suspect that the individual is exaggerating or is inconsistent they can’t prove it. Their notes must say ‘patient complained of being in pain’, music to the ears of avaricious lawyers.
Of course we have been here ourselves, as I have written about before. We had a ‘compo-culture’ where people regularly followed any accident with a claim. Pushed by the legal industry the ethos was always to seek to claim the maximum amount.
Our solution was to establish the Personal Injuries Assessment Board in 2003. Despite what its detractors say (and you will note that virtually all of its detractors are lawyers ) it has worked beautifully. Ten years ago a typical Irish insurance premium was double the price of its UK equivalent. Today that is the other way around.
The incentive for change has to come from government. Thankfully Britain has its own AA and they are working hard to light fires under the appropriate backsides which is partly why the Commons Committee was looking at it.
It is a misconception to think that Insurance companies are losing out or that they hate paying big claims. Dorothea Dowling, chair of the Injuries Board, phrased it beautifully when she said that insurance companies do not pay insurance claims: motorists do. Insurance companies just handle the transaction.
What’s more, insurance companies can quite readily figure out how expensive it is. If the legislative landscape is tolerant of a claims culture insurers will just price that in so that in effect every motorist pays extra to allow the scammers a free ride. Insurers themselves (and this is not their fault ) do not actually have any incentive to fix the problem.
To make matters worse the British are extraordinarily tolerant of their legal industry encouraging claims through major advertising campaigns. This is deeply cynical and we most certainly do not want anything similar over here. Like their ‘payday loans’ that actively target the unemployed these are ethical bottom feeders and we should prevent them taking root in Ireland.
Reform will come for the hard-pressed British motorist. It will come slowly if the government ignore the AA, more quickly if they do as advised. And the advice is not terribly complicated: take a look at what was achieved relatively easily by Ireland when faced with the exact same problem, and implement the same measures.