Personal injury claims reform has been put off again, and whether the new government will pursue reform is unclear. When the Prisons and Courts Bill 2016-17 (HC Bill 170) was scrapped, so were fixed tariffs to cap compensation payouts for whiplash injuries. That’s a blow to efforts to eliminate fraudulent and exaggerated claims from the more than 1,500 whiplash claims made in the UK every day. With no whiplash compensation caps and the possibility of a permanent increase in the Ogden discount rate, settlement costs for personal injury claims could rise significantly and push up motor policy premiums. Amid this uncertainty, insurers must look for ways to reduce costs and measure results to remain competitive.
A Shift in Advance of Reforms?
Some insurers are reporting an apparent change in personal injury claims patterns, regardless of legislation. This may be a sign of ‘pre-emptive’ claims displacement we considered among the possible outcomes of HC Bill 170. Claims displacement occurs when the definitions or compensation levels for various injuries changes, and then the number of claims for injuries associated with higher compensation levels increases in proportion to a decrease in other injury claims. Under HC Bill 170, injuries limited to the upper torso would be compensated based on a fixed tariff-- significantly lower than existing levels. What insurers report specifically is an increase in claims for injuries that cause pain in multiple locations, including the shoulder and lower back. Those injuries must be evaluated and would not be subject to the proposed tariff.
Capturing Claims Data Leads to Greater Insight and Cost Savings
Without the ability to see such claims patterns, insurers are exposed to greater risk of overcompensating injury claims. Claims handlers can more quickly arrive at consistent settlements and better identify fraudulent and inflated claims when they can capture claim details and compare them to other injury claims and settlements. That’s how structured data brings cost savings-- no matter the government policy concerning payouts for personal injury.
ISO will continue to monitor and provide updates on claims reforms and other developments in the insurance industry.
 Whiplash claims ABI. (n.d.). http://www.abi.org.uk/products-and-issues/topics-and-issues/personal-injury-claims/whiplash-claims/