NEW technology could be the only way to crack down on the fraud which has prevented the motor insurance sector from making a profit for 14 years.
The claim comes after the government announced plans to limit the whiplash claims which have risen by 50 per cent over the past decade.
It has been estimated that scrapping the right to compensation, or capping whiplash claims at £425, could save policy-holders £40 a year.
Mark Robinson, of Bournemouth, recently launched Jolt, an app to turn a phone into a dashboard camera that can record accidents and instantly send details to an insurer. He welcomed the government moves but said technology was the best way to deal with the problem.
“There are over 100 motor insurance brands but they whittle down to 20 operating companies. The motor insurance sector hasn’t made a profit for 14 years,” he said.
“They’ve always made a loss but it supports their business selling other policies. The losses have been getting bigger and bigger over the last 10 years and the reason is predominantly insurance fraud.”
He said 90 per cent of personal injury claims were for whiplash, often encouraged by claims management companies.
“Those management companies were actually encouraging people to claim for whiplash. The payouts they were getting, as a minimum, were £1,800 but you could get £6,000-£7,000 depending how severe it was and whether it was supported by medical records,” he said.
“The Association of British Insurers estimates that at least 50 per cent of that is fraudulent.”
He said every insurance policy carried an extra premium of around £93 to cover the cost to the industry of fraud. He said the full picture of fraud included engineered ‘accidents’ and ‘phantom’ claims where there was no other party involved.
“The problem is growing year on year. The insurers are trying to deal with it by cooperating in their processes and by vetting claims, but they’re incredibly difficult to deal with and without photographic and evidence the only way really to start to make an impact, both on the financial numbers and numbers of claims, is by using technology that will get information to the insurer at a speed they can do something about it,” he said.
He added: “Most incidents are reported well afterwards when the parties have left the scene. Insurers can do little else but to accept the word of their policy holder, who might have a different view to the other party.”
He said figures already showed that dashcam users were half as likely to be involved in an accident as other drivers.