Whiplash injuries are some of the most complex and costly outcomes of a motor vehicle accident for a variety of factors.
The recent passing of the whiplash reforms seeks to reduce both the volume and cost of these claims, but insurers have a few hurdles ahead of them still.
Gordon Vater (GV), Director – Carrier Practice, spoke to Andy Sewell (AS), UK – Technical Director, on how this change will impact insurers in the months to come.
GV: Why have these reforms come about?
AS: Back in 2015, the Government stated it was committed to tackling the continuing high number and cost of road traffic accident whiplash claims. The high volume of these claims has led to increased motor insurance premiums, and consumers lobbied the government to address this. Despite significant advances in vehicle safety, the number of whiplash claims has remained stable. As part of the Civil Liability Act 2018, the Government introduced whiplash reforms with a view to reduce both the volume and cost of these claims.
The reforms increase the Small Claims Track limit to £5,000, from £1,000, which sees the threshold for recoverable legal costs higher for insurers. They have also introduced new protocol for handling applicable claims, to try and reduce the necessity for legal representation. During the assessment phase, the whiplash element will be awarded based on a scaled tariff set against the forecast recovery period.
GV: What’s going to change in how insurers handle whiplash injuries?
AS: Early indications since the reforms came into play show that claims will be presented to insurers in a different way. The reforms intend that less claimants will use legal representation, so the way claims managers handle conversations with claimants and manage decisions about these claims.
Insurers will also need to consider the way liability is investigated and all collated evidence will need to be very proactive. The new reforms mean a decision on liability is needed within 30 working days of the claim being presented. This puts immense pressure on insurers to adequately resource claims management to ensure all evidence is disclosed in advance of this deadline so a decision can be made.
GV: Do we expect to see this pressure on staffing increase in line with increased road usage?
AS: As we continue on our re-opening roadmap, it’s certainly expected that we see an increase in traffic on the road and therefore the frequency of accidents will likely increase too. We do expect to see the pressure on insurers staffing continue with a potential rise of whiplash claims under the new reforms. It’s really important insurers take the time to review their claim processes, implement improved processes where possible and ensure maximum proactivity around liability decision making.
Our team has already been brought up to speed on solutions to insurer’s proactivity needs and offer full review and audit services through our claims consultancy division. We can work with you to identify challenges in your processes or scale up your team to fully outsource claims handling.
To learn more about how Gallagher Bassett can help your company manage the whiplash reform impacts, connect with our team today.
