UK 'whiplash capital of Europe'

The UK passed a law several years ago allowing lawyers to charge on results rather than a fee based on time spent.  Unfortunately, amongst many other unintended consequences is this one.

From: http://www.telegraph.co.uk/finance/personalfinance/insurance/motorinsurance/8522985/UK-whiplash-capital-of-Europe.html

Insurers have called for a clampdown on fraudulent whiplash claims which they say are driving up the cost of motor cover for honest motorists.

Rear-end shunts often result in costly claims for whiplash Photo: ALAMY

The Association of British Insurers (ABI) said the UK was now the "whiplash capital of Europe", with one out of every 140 people claiming for a whiplash injury each year.

It said the activities of ambulance chasing lawyers and claims management firms, as well as staged "cash for crash" accidents, were driving up the number of claims.

Whiplash occurs when the soft tissue in the spine is stretched and strained following a sudden forceful movement, such as being hit from behind in a car.

But it is often difficult to diagnose, while it is easy to fake or exaggerate, making claims for the injury a target for fraudsters.

Around 1,200 whiplash claims are made in the UK every day, six times more than the number of people who claim for workplace related injuries each year.

UK 'no win, no fee' lawyers

In 1999 the UK enacted a law that allowed lawyers to offer what is commonly called 'no win, no fee' services. The intention was to reduce legal aid being paid to people who could not afford legal fees and to enable the less economically able to file law suits.


Guess what, in a little over 10 years the situation has given rise to what is called 'ambulance chasing' by law firms, many of whom advertise themselves as mainly or solely 'no win, no fee' firms. 


As reported in Wikipedia -  http://en.wikipedia.org/wiki/Contingent_fee  - "On 29 March 2011, Justice Secretary Kenneth Clarke announced plans to reform contingent fee arrangements, as part of reforms to the justice system prompted by a review of civil litigation costs carried out by Lord Justice Jackson.^[7] The changes were prompted by large rises in litigation costs and the proliferation of ambulance-chasing advertisements and claim farmers.^[8] The National Health Service has been forced to pay out hundreds of millions of pounds in recent years.^[8]"

^{And as reported in the Guardian -  http://www.guardian.co.uk/business/2012/may/01/lloyds-boss-hits-out-fraudulent-ppi-claims  - "}The chief executive of Lloyds Banking Group hit out at fraudulent claims for payment protection insurance compensation on Tuesday as the bailed out bank increased its provision for mis-selling the controversial product by 12% to £3.6bn.

António Horta-Osório said the £375m additional provision was a "minor adjustment" when asked if it would require the bank to pursue any additional clawback of bonuses from former and current directors. Some £1.5m was clawed back following the £3.2bn provision taken last year.

<sup>But he criticised the claims management companies that submitted 45% of the claims the bank received in February and March, from customers who typically bought the insurance when taking out a loan, to cover themselves for illness or other hindrances to paying it back. Of the claims submitted by these firms, 25% were from people without Lloyds products."


Yet again, the Law of Unintended Consequences strikes.</sup>