The new Civil Liability Act aims to combat car insurance fraud and is already improving the way we make small insurance claims – helping drivers save an average of £35 on their premium 1.
In total, the insurance industry expects to save over £1 billion, and we’ve led over 20 insurers in pledging to pass these savings onto their customers.
Here’s what the Civil Liability Act means for the industry – and, most importantly, for you.
Why is the Act good news for customers?
The Civil Liability Act will help make car insurance more affordable, reduce the number of injury-chasing nuisance calls, and will make our roads safer by removing the financial incentive for crash for cash fraud.
Why? Insurance fraud costs companies around £340 million a year and these costs are passed onto car insurance premiums. Scams known as ‘crash for cash’ – where drivers cause an accident and then claim against the other driver for whiplash injuries – make up a big chunk of that figure. It may sound odd that someone would put their safety, as well as others, at risk. But this behaviour is encouraged by the amount of money fraudsters can get from their claim 2.
“Until now, we’ve all paid into a system that rewards fraudsters, claims management companies and personal injury lawyers at the expense of honest drivers,” says Andrew Morrish, UK Claims Director.
“The new law will allow insurers to focus on those with genuine injuries and claims, and ensures we help them when they need us most.”
How does this impact whiplash claims?
How you claim for all soft tissue injuries (including whiplash) is changing. For those who don’t know, whiplash is an injury that happens when your head suddenly moves backwards, forwards, or sideways, and your neck gets sprained 3.
If you claim for an amount under £5,000 – raised from the previous limit of £1,000 – you’ll need to do so through a free online claims portal.
The portal (and the rules which accompany it) is currently being developed and will be ready to use in April 2020, so things won’t change until then.
What does the Act mean for the UK insurance industry?
The Government hopes this will be a major step towards changing the UK’s compensation culture for the better. Until now, compensation for minor whiplash claims has been too generous and accessible, leading to an increase in fraudulent and exaggerated claims.
Payouts for whiplash will be determined by new tariffs that are still under review. Compensation averages are expected to lower – estimated at £235 for a 3-month injury, compared to around £1,800 previously. And to deter fraudulent claims even further, you’ll have to use the money you claim to pay for a personal injury lawyer if you want one. Whereas before, the lawyer could claim legal costs from the insurer 1.
“Vulnerable road users such as cyclists and pedestrians are not subject to the proposed tariffs in the legislation and so won’t be impacted”, says Andrew.
This new legislation will protect genuine claimants while helping prevent the kinds of bogus claims often pushed through by claims management companies and some injury lawyers.
What else is being done to fight fraud?
By combatting fraudsters, we’re helping to keep premiums low for honest customers.
“In 2017 we detected £90 million worth of fraud – that’s £246,000 every day,” says Andrew.
“In addition, we’re investing in defending our customers, with over 800 customers defended in 2017. But it’s not just about detecting fraud – we’re also investing in preventing fraud from happening in the first place by screening all new and existing customers.”
If you’re looking for protection against fraudsters while you drive, dashcams are a great way to prove that you weren’t at fault in an accident. Our free Aviva Drive app offers an easy-to-use dashcam feature. It will automatically detect collisions and save the footage involving the accident, which you can send directly to our claims team from the app.
Read more about what we’re doing to fight fraud.