Whiplash accounts for 80% of motor claims - insurance chief

Motor premiums rise by 30% with AIG saying whiplash claims should be banned

Insurance Ireland chief executive Kevin Thompson said fraudulent claims are another increasingly big problem. Photograph: Dara Mac Donaill / The Irish Times

Insurance Ireland chief executive Kevin Thompson said fraudulent claims are another increasingly big problem. Photograph: Dara Mac Donaill / The Irish Times

 

The head of Insurance Ireland said today that claims for whiplash in motor accidents here now accounts for up to 80 per cent of motor insurance claims compared with just 3 per cent in some other countries.

Kevin Thompson, chief executive of the organisation said at the moment awards for whiplash in Ireland average € 15,000 per case compared with € 5,000 in the UK and € 3,000 in France and Spain.

He was reacting to comments from AIG, the world’s biggest insurer, which wants Ireland to consider banning whiplash claims to help counter soaring motor insurance charges and to avoid the average cost of premiums hitting € 1,000.

Car insurance premiums have seen an increase in excess of 30 per cent in policies being renewed in the first two months of this year with speculation that there could be a further rise still.

Mr Thompson said fraudulent claims are another increasingly big problem, adding € 50 to every car insurance policy.

Speaking on Newstalk radio, Mr Thompson said there are a lot of factors driving the current increases in insurance premiums.

Increased premiums were not good for the industry as this tends to lead to more uninsured drivers on the roads.

He said over an extensive period there has been an ongoing increase in the frequency of insurance claims and this was happening at a time when the level of awards by the courts had increased by 14 per cent.

This could be linked to changes in the jurisdiction of the Circuit Court whereby that court can now award up to €60,000 while previously it was up to a limit of €38,000.

Mr Thompson said legal costs were another significant factor, accounting for hundreds of millions of euros in terms of awards that have been paid out, as legal costs account for 60 per cent of total compensation in litigated cases.

“I’m not saying the courts are an easy touch when it comes to whiplash claims but as a society we need to decide what is the level of compensation that we want to give people”, Mr Thompson said.

“If we want to have reasonable awards for people in accidents then they should be compensated at a reasonable level”.

He said it was difficult to predict how insurance premiums would go over the coming 12 months.

“We need to take the volatility out of the market” he said.

“If we can take that out of the cost of claims, reduce the level of awards for whiplash, keep legal costs down, then we potentially have a chance of stabilising claims.”