An estimated 50 per cent of all whiplash claims from car crashes are bogus, insurance experts have told MPs. And with each claim typically paying out £2,500, the estimated cost of fraudulent claims is £1 billion every year.
Reporting to the Commons transport select committee, David Brown, from the Institute and Faculty of Actuaries, and David Powell, of the Lloyd's insurance market association, said fraudulent whiplash claims have become a "huge problem", and suggested the UK is now "the whiplash capital of the world".
Mr Brown and Mr Powell told MPs that the medical and legal tests used to establish whether a whiplash claim is legitimate are not stringent enough, and that the threshold for settling a claim is "too low".
Insurance companies estimate such bogus claims add around £90 onto the cost of the average car insurance policy.
Experts say the fact that it is cheaper to settle than to fight those cases suspected to be fraudulent, combined with the rise of "no-win, no-fee" claims firms are both playing their part in the soaring number of fake claims.
According to the Daily Mail, Mr Powell told MPs: "It's so easy to fake, it's so easy to exaggerate. There is a claims manufacturing industry which has developed over the last ten to 15 years. It has gone into overdrive."
He suggested: "If you have a more stringent test, you will get more of the fraudulent claims challenged and more fraudsters put off."
What do you think? Should insurance companies crack down on suspected bogus whiplash claims? Leave your comments below...