According to a recent report from one firm, whiplash accident claims are contributing to the rising costs of car insurance for UK motor vehicle operators.
While many other issues, such as fraud and frivolous car accident claims, are also a factor in the rising premiums for the 33 million-odd drivers in the UK, the insurance industry has been in such dire straits due to the prevalence of whiplash injuries and other serious claims that it has not turned a profit for over a decade and a half.
According to a Fitch Ratings report, for every £100 the insurance agency collects in premiums, £123 is paid out in traffic accident claims. This is most notably caused by not only fraudsters pulling the wool over insurers’ eyes but also whiplash claims brought by motorists through the aid of personal injury lawyers.
On an average £450 yearly insurance premium, according to one insurer, nearly £220 of the policy goes towards the costs incurred by paying out on fraud, whiplash claims, tax, and legal fees. This amounts to nearly half of the entire premium.
There are several other factors at work that drive the cost of premiums for consumers. As roughly 1 out of every 20 drivers operate without procuring cover for their vehicles, £30 are added to honest drivers’ premiums every year. Uninsured drivers have been determined to be 10 times more likely to have drink driving convictions on their record, and are 5 times likelier to have some involvement in traffic accidents, to have failed to comply with other requirements in regards to road traffic, and to have some level of engagement in other criminal activities.
Additionally while the maximum fine for being caught driving without insurance is £1,000, these uninsured drivers are more likely to merely be fined around £200 in the event of their being caught, which is substantially less than the average yearly insurance premium.