Institute and Faculties of Actuaries (IFoA) warns of claims resurgence despite drop


The number of motorists making whiplash claims has fallen 12% since the Legal Aid, Sentencing and Punishment of Offenders Act (Laspo) came into force in 2013, the IFoA has said.

This coincides with a 19% drop in the cost of whiplash-type bodily injury claims.

The declining claims figures has also led to a 35% drop in the number of claims management companies.

Another interesting fact to emerge from the IFoA study was that the legal fees had reduced by 65%.  

David Brown, one of the report’s authors, said: “The effect of legal changes such as Laspo continues to be felt across the industry.

“This has not just meant a reduction in legal costs, but, at least for now, fewer claims being brought following a decline in the numbers of claims management companies.”

But Brown added: “It is not yet clear what the impact will be of the increasing number of organisations offering ‘alternative business structures’.

“These structures allow insurance companies, brokers and accident management companies to refer clients to their own law firms, and generate revenue from legal services. There is certainly scope for these organisations to take up where claims management companies left off, and for us to we see a new surge in claims costs.”

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