Claims inflation: Motor

When it comes to exploring the extent and impact of claims inflation in the motor market, perhaps the most significant area of focus is claims arising from bodily injury, which appear to have had a greater impact in this market since June 2021 than on other casualty lines.

The so-called ‘whiplash reforms’, introduced for accidents occurring on or after May 2021, were designed to tackle compensation culture by fixing whiplash pay-outs and limiting the recoverability of legal fees. The reforms appear to have had a significant impact in reducing claims frequency, however, the market appears to be a victim of the reforms’ success because curtailing the frequency of whiplash claims has, as anticipated, incentivised claimants to advance claims for injuries allegedly sustained to other parts of the body. Insurers are now having to grapple with the implications of this displacement.