- By Region
Liverpool has emerged as the whiplash capital of Britain, where the government has recorded more than one compensation claim for neck injuries sustained in a traffic accident for every 50 residents.
A “heat map” drawn up by the Financial Times after a freedom of information request, shows a wide geographical disparity in alleged whiplash injuries, with 20 times more compensation claims per head in Liverpool, Uxbridge and Oldham than some other parts of the country.
Personal injury lawyers suggested regional variations in accident rates helped explain the figures – but insurers said they provided one of the clearest signs yet of fraudulent claims.
Ministers have pledged to crack down on Britain’s supposed compensation culture and have highlighted whiplash as one of the biggest problems. They plan to ban so-called referral fees, which personal injury lawyers pay to insurance companies and other parties to gather the contact details of accident victims.
Whiplash is caused when the head moves suddenly forwards, backwards or sideways, damaging ligaments and tendons in the neck. It is difficult to diagnose and doctors must rely on the patient’s description of symptoms and the accident that caused it.
The data show that nine of the 10 postal areas with the lowest number of whiplash compensation claims per head were in Scotland, where the legal system imposes stricter controls on referral fees. There were only three claims for every 1,000 residents in the Edinburgh and Dundee areas in the year to March 31 2011. This compared with 22 in Liverpool and 21 in Uxbridge, west London.
Only one area in the bottom 10 – around the City of London – was in England.
“I don’t believe people in Scotland have significantly stronger necks,” said Dominic Clayden, claims director at Aviva.
Insurers blamed, in large part, companies that manage claims for encouraging accident victims to apply for compensation.
“Claims management companies have gone to economically deprived areas where people are vulnerable,” said Adrian Brown, chief executive of UK and western Europe for RSA, whose brands include More Than.
Data provided by Towers Watson, the consultancy, show a high density of claims management companies in the whiplash hotspot areas of north-west England and around Greater London.
”There’s a whole marketing campaign to get people to claim,” said Mr Clayden. “There’s text messaging, endless adverts on telly and in the newspaper.”
The whiplash figures were obtained from the Department for Work and Pensions by Exane BNP Paribas, the investment group, under freedom of information legislation. They were adjusted for population by Experian, the analytics consultancy, and show a 4 per cent annual reduction in nationwide claims to 543,000. However, insurers said this reflected fewer accidents, down in part to less driving activity as a result of the recession.
Insurers said they would like to challenge more claims but concerns about legal fees made them more likely to settle out of court. Ministers have pledged to cap the fees for personal injury claims.
However, lawyers have urged caution. “There are some spurious claims around but you’ve got to make sure that people who are injured can be properly represented,” said John Spencer, director of Spencers solicitors. “I’m concerned that some people in high risk or complicated cases won’t be able to get their claim off the ground.”
Insurers have responded to wide variations in whiplash claims levels by raising premiums, particularly in those areas.
However, underwriting remains lossmaking overall. The industry paid out £1.06 in claims and expenses for every £1 it earned in premiums in 2011.
The companies also make money by investing the premium income and from ancillary sources – such as referral fees, a practice that hurts the industry overall but helps individual insurers recoup underwriting losses.
Insurers are also facing criticism for the extent of regional pricing variations.
Jack Straw, the former justice secretary who led a campaign against referral fees, has urged insurers to stop determining premium rates on postcodes.
“Insurers are essentially saying, ‘Because you live two doors down from somebody who’s a high risk, we’re going to penalise you’. This is simply unacceptable.”
The Labour MP said the social costs of high motor insurance were “very serious” and may even be exacerbating Britain’s youth unemployment problem. “There is no doubt they make people much less mobile. People need motor cars to get to work.”
But insurers have hit back. “We operate in one of the most competitive motor insurance markets in the world,” said Mr Clayden. “The reality is insurance is very neutral – we will ultimately charge people for the risk they present us.”
Insurers have also complained claims management companies are encouraging individuals to make claims in other areas.
Zurich said this month the number of UK claims from employees seeking compensation for hearing problems arising from noisy workplaces jumped by about 25 per cent on 2011.
Additional reporting by Clive Cookson