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A Policy of Trust? A Very British Problem for Insurers

 22nd Nov 2016

A Policy of Trust?


Possibly the most concerning piece of information to come from the recent ABI (Association of British Insurers) Motor Conference 2016 is that people in the UK are 26 times more likely to make a claim for whiplash than their French cousins over the Channel.



Are our necks 26 times weaker? Is there some physical defect in us Brits? We may have “stiff upper lips” but it would appear that we have very fragile necks!


For good reason, Britain is known as the "Whiplash Capital of the World" - with 1,500 insurance claims a day, many of which are spurious, adding £90 to the cost of car cover. (Source: Dan Hyde, The Telegraph, 13 Nov 2016)

Whiplash now accounts for 78% of all personal injury claims in the UK, compared to just 3% in France. It has of course nothing to do with the relative size and strength of our necks versus French necks. It’s all to do with fraudulent claims and the fact that the French diagnosis of whiplash requires “objective proof based on more rigorous medical testing” according to Axa, one of the leading insurance firms in France. Claimants are also forced to pay for an initial report into the injury. The result of far fewer claims is that motor insurance costs citizens 40 per cent less in France. This is also true across other parts of Europe where there is more onus on the claimant to prove the extent of their injuries.

When you consider how the cost of our insurance premium is broken down, it’s easy to see how a reduction to bring us in line with the rest of Europe could have a material impact on the savings that insurance firms could pass on to every UK motorist if we stopped buying into the personal injury law firms who call us weekly. But how is that culture shift going to be encouraged?


Uninsured Driving is Not a Victimless Crime


Uninsured motorists are a well-publicised (and insurable) risk. With the police focus on this, supported by the ANPR systems increasingly pervasive on our roads now, we will continue to drive down the number of uninsured motorists in the UK. This results in only 2% of the costs being associated with uninsured drivers compared to some 37% being apportioned to “bodily injury”.

That’s 37% of the premium but only 9% of number of accidents recorded. More than the uninsured, it is the compensation culture in the UK motor insurance market dynamic that is most impacting law-abiding motorists and driving up the cost to the industry. In fact, since 1994 the UK’s private motor insurance industry has paid out more than it has made in premiums (source: ABI).

The increasingly pervasive belief that this is somehow a victimless crime is causing normally decent human beings to behave in a way that is contrary to their normal behaviour. The ease and, some might argue, the pressure that “ambulance chasing” injury lawyers put on people to exaggerate, or even to falsify claims, is making ordinary motorists the victims as motor insurance firms are forced to increase their prices to compensate for the compensation pay-outs.

This vicious circle of claims and pay-outs followed by increases in premiums plus more people thinking that they want to get something back for all the money they’ve paid without making a claim for years perpetuates the cycle and worsens the situation. People are also urged to visit GPs and hospitals as well as to report details of the “accident” to make their claims appear more legitimate – thereby impacting on already hard-pressed public services like the NHS and the police. So will the answers come from the Industry, Government or other sources?


Is Changing the Insurance Industry the Answer?


Recent reforms by the UK Government to help the insurance sector to address this worrying situation are too new to have resulted in a marked change yet, but the Government estimates that these reforms will save £1 billion, savings that could lead to lower premiums for motorists. Raising the small claims track limit from £1,000 to £5,000 should reduce expensive legal costs and with more claims being challenged and fewer being won, insurers estimate that policy premiums should fall by around £40-50 per policy to customers in 2017.

Advances in technology such as telematics are already proven to reduce the premiums of young drivers who elect to fit these units; they in turn are not only driving safely but also not making spurious claims for compensation. This coupled to the changing culture in insurance firms to fight more of these claims, often challenging the personal injury law firms, are all helping support the reforms being put forward by the Government.

Whilst there is, naturally, a place in society for reputable law firms to fight the cause of the innocent using their weight and experience to support properly made claims, it is also important to recognise that the approach of “cold calling” innocent members of the public and encouraging them to lie about the extent of their injuries (or even the claim that an accident ever took place) has to stop.


The Issue of Trust: A Two-Way Street?


In 2015, insurers detected and prevented 70,000 dishonest motor insurance claims, valued at £800million. That is £800million saved for honest customers – money that can be given back to all motorists in the form of a reduction in premiums in 2016 and beyond.

Trust is indeed a 2-way street. If the generally honest members of the public, trust and accept that insurance companies will pay out in the event of a valid claim (according to the ABI 99% of all car, home and travel insurance claims are paid out, so clearly that isn’t the real issue) and the insurance companies trust and validate that claims are for genuine reasons, then we hopefully reach a situation where the more disreputable personal injury law firms will cease to exist.

Another disturbingly interesting fact presented at the conference was that as a demographic, fraudulent claimants tend to be from poorer backgrounds, in need of quick cash. Evidence presented by insurers found that claims peak at Easter, Christmas and during the summer holidays. In other words, volumes are driven by the need for cash, rather than a crash.

This is where claims technology can support all ‘honest brokers’. Multi-modal biometrics (facial recognition, or analysis of voice patterns, fingerprints, handwritten e-signatures, etc.) for example can play a major part in reducing insurance fraud even further whilst helping the insurance industry to offer greater value to motorists at the time it is most needed.


Improving the Claims Process with Technology


Imagine the scenario where a motor accident occurs and both the insured driver and the third party are clearly upset and/or aggrieved at the situation arising. Fully expecting to be mired in “red tape” and for the process to take time, imagine the surprise as the insured party fires up a video conversation with someone on the claims helpdesk to discuss the events surrounding the accident - with the claims advisor able to immediately offer guidance and advice. This is especially beneficial if the insured party is a young driver and it’s their first accident; it’s a fact that drivers aged 17-19 make up 1.5% of licence holders but are involved in 9% of fatal and serious crashes.

Using the camera on their smartphone they can capture details of the events in front of them to be instantly shared on screen with the claims handler. They can also facilitate easy capture of details of the third party’s insurance policy and driving license using the same camera with sophisticated data capture technology back-end extracting the pertinent information. This checks the details against ID validation systems including the DVLA in order to verify that they’re insured and authorised to be driving the other car. If they’re not, then the Police could be called without either party on the call being aware so that uninsured and/or disqualified drivers can be dealt with at the scene.

Images of the incident can be captured and immediately uploaded to a claims file along with a voice transcript of the events from both parties. Using the insured party’s smartphone, they can both biometrically e-sign to say that the accident details are accurate and the claim can be immediate assessed or possibly even settled. The claims agent could be anywhere and on any device, they don’t have to be in front of a computer as depicted above. That could open up a whole new way of interacting with claimants as not all accidents happen between 9am and 5pm.

Suddenly, that’s a very different experience to the situation we have today and could help reduce fraudulent claims significantly. It would also generate a lot of loyalty or new business from impressed drivers. If the third party is leaping around whilst tearing their hair out, as depicted above, then it’s unlikely that they will later be taken seriously if they make a personal injury claim as the whole conversation outlined above has been recorded for audit and regulatory compliance purposes with supporting video evidence.

Surely if people realise that by making fewer fraudulent claims they can get a totally legitimate reduction in premiums year-on-year, then the current culture in the UK of ambulance chasing and making false claims will by design or default simply fade into the distant horizon. Trust smart technology used with common sense to make this possible!



Post by Richard Marsden, a Director at Icon UK.


You can contact Richard on 0203 150 1081 or email


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