Has the mixed-injury claims ruling opened a floodgate to fraud?

Last month, the UK Supreme Court made a much-anticipated judgment regarding how mixed-injury motor insurance claims should be compensated. 

It ruled that where whiplash injuries (WLI) and non-whiplash injuries (NWLI) have occurred in the same road traffic accident, total damages to the claimant for pain, suffering and loss of amenity (“PSLA”) should be calculated by:

• Assessing the statutory tariff amount for WLI and (common law) damages for NWLI.
• Adding these amounts together. 
• Then reducing the latter (the WLI tariff cannot be reduced) to account for any overlap and subsequent overcompensation for injuries received concurrently. Total damages awarded cannot be lower than a scenario where only NWLI had occurred. 

The decision has been described as a “sensible middle ground”, including by Maxwell Scott, executive director of the Association of Consumer Support Organisations (ACSO). However, sensible does not mean silver bullet. And when it comes to fraud prevention, the case has two significant implications for insurers. 

1. Battling the backlog: volume means risk.

While the mixed-injury motor insurance case has been moving through various legal mechanisms, tens of thousands of personal injury claims have been logged via the Official Injury Claims (OIC) Portal but not progressed. 

Essentially there has been a state of limbo in anticipation of a potential revision to the compensation calculation methodology. Now the wait is over, the floodgates are arguably open to a tidal wave of claims. 

Insurers are now under huge pressure to process cases and pay out quickly. Both from a customer service perspective and to minimise claims handling costs.

With rising rates of exaggerated claims in motor insurance, the danger here is that many fraudulent claims could slip through the net. And, while individually, such cases may be of relatively low value, cumulatively (given the high volumes in limbo), the cost to insurers could be significant. 

2. Rising premiums and the connection to application fraud 

It is highly unlikely that claims payouts will decrease following the Supreme Court judgement. What’s more, they could soon go up. 

This is due to a host of factors. For example, 2021’s whiplash tariff is up for review, and its maximum cap is expected to rise. Add to this the continued supply chain challenges and expenses associated with increasingly prevalent electric vehicles, and insurers will likely need to raise premiums in response.  

The connection between tightening consumer budgets and fraudulent behaviour is well-established now. 

And as the cost-of-living crisis continues to bite, insurers can expect an increase in application fraud – especially where cases have been in stasis, potentially allowing dishonest claimants time to generate false evidence. 

The value of automated accuracy 

The pressures highlighted – both acute and longer-term – underline the vital importance of fraud defences across the insurance lifecycle, from quote to claim. But also the need for those defences to support faster outcomes without compromising risk resilience. 

However, some insurers will find themselves at an advantage. Namely, those using predictive analytics tools modelled on syndicated risk intelligence data.  

Such technologies, such as Precision, are ideally suited to spotting meaningful data correlations hidden in the huge volumes of data that can accompany each case. When fed by risk insights from a syndicate and an insurer’s customer portfolio, accuracy is greatly enhanced. 

And syndication unlocks one significant benefit: automated decisions that insurers can trust. With automation on your side, insurers can successfully navigate the post-ruling landscape. 

In the first instance, you can enable genuine claims to be processed faster and quickly flag those needing deeper investigation. Similarly, at the other end of the cycle, leveraging syndicated risk intelligence alongside Real-Time Quote (RTQ) solutions allows insurers to confidently automate policy application screening.

For example, SIRA Real-Time Quote gives you immediate access to the very latest information on potential high-risk applications, based on bespoke verification, risk and compliance checks leveraging your own data and that from the National SIRA risk intelligence syndicate. This means increase speed and complete confidence, without higher risk exposure.

With the right defences, insurers can defend against the potential flood of mixed-injury claims. Learn more about combining data syndication and predictive analytics in your claims fraud strategy and contact a Consultant below.