British gov't to clamp down on false motorist injury claims

British motorists were Monday promised a 1.5-billion-U.S.-dollar cut to their auto insurance premiums thanks to a government clampdown on fraudulent injury claims.

Claims for whiplash injuries are adding an average 135 U.S. dollars to the cost of an annual insurance certificate, said the ministry of justice (MoJ).

Major insurance companies told the MoJ all of the savings made from a government-backed clampdown on false claims would be paid back to honest drivers in the form of reduced premiums.

The rising number of whiplash claims, made worse by unannounced telephone calls from claim companies to motorists involved in minor accidents, has angered motorists and politicians alike.

Currently, insurance companies in Britain pay out more than three billion U.S. dollars a year to settle whiplash claims.

Aviva, one of the leading insurers in the country, told the Financial Times Monday that it had 16,000 suspicious claims under investigation last month.

The company said whiplash claims accounted for 80 percent of its compensation claims by motorists in Britain, compared to France where just three percent of claims were linked to whiplash injuries.

The MoJ said Monday an agreement to return all the savings to honest motorists came after a roundtable meeting between the insurance industry and government ministers.

This was after Chancellor George Osborne announced in his autumn statement that the government would end the right to cash compensation for minor whiplash injuries.

Justice Minister Lord Faulks said: "We are determined to crack down on the culture of fraud and exaggerated claims in the motor insurance industry, which means car owners are forced to pay higher premiums to cover the false claims of others. This culture is boosted by an industry that encourages exaggerated claims through cold calling."

The detail of the plans will be consulted on early in 2016, with new measures introduced as soon as possible.

James Dalton, director of general insurance at the Association of British Insurers, said: "The government reforms are a significant breakthrough in tackling the UK's compensation culture and are good news for motorists. Reforms will help to bring down unnecessary costs in the motor insurance market."

Mark Wilson, CEO of Aviva, said his company would pass on 100 percent of the savings from the government initiative to Aviva customers.

"The government is putting the brakes on the whiplash gravy train. It is great news for consumers. Sadly, law-abiding motor customers have paid for the UK's dysfunctional and fraudulent motor claims system through inflated motor premiums." Endit