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Injured motorists face loss of compensation

Car insurers paid out some £2.4 billion less in 2014 than they did in 2010, despite their warnings of a spike in fraudulent injury claims.
Chancellor George Osborne has announced measures to restrict fraudulent small injuries claims that he says will save insurers £1 billion a year. There is a pervasive narrative in the media about insurance fraud, and particularly car insurance, with minor injuries being a big problem. However, the fraudulent claims narrative is not borne out by the data, which has seen a 29 per cent fall in payouts over the last four years.
Minor injury claims are thought to cost the insurance industry around £2 billion a year, or around £90 per policy. If government proposals go ahead, the threshold for solicitors to deal with minor injuries – which include whiplash – in the small claims court will rise to £5,000 from £1,000, meaning that some victims will no longer receive compensation. Mr Osborne has suggested that the cost of these injuries to insurers is out of proportion to the pain involved, but the move will mean that many people will not receive a payout despite a debilitating injury and is being strongly opposed by the legal sector.
It is believed that the savings, if passed on to motorists, could amount to almost £50 per policy. However, critics have suggested that insurers have exaggerated the problem of fraud in order to reduce their costs via a change in the law. One personal injury solicitor commented, “Most of the car insurers are making record profits and seeing their share prices hit records highs, outperforming the rest of the stock market. Meanwhile, premiums have increased 9.2 per cent in the last year, and motorists are threatened with legal changes that will mean they will either see less compensation because they will have to pay for their lawyer from their damages or they will have to take on insurers on their own if they are unfortunate enough to suffer a road accident.”
Diane Parker, partner and head of personal injury commented: “When someone earns well in excess of £134,000 per year, as does Mr Osborne, these damage levels are unlikely to mean a great deal. Whereas, to a worker on minimum wage or to someone on benefits a “minor injury” is likely to be much more debilitating on the one hand and the compensation much more significant on the other.”

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