July 4, 2014 / 10:16 AM / in 3 years

UPDATE 1-UK MPs urge insurers to confirm whiplash and stop fraud

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July 4 (Reuters) - Insurers in the United Kingdom should be banned from settling any whiplash injury damage claims without first asking for a proper medical examination in order to limit fraudulent claims, members of parliament said in a report on Friday.

The government should also stop personal injury lawyers from offering inducements such as cash or tablet computers meant to encourage injured drivers to make claims, the report published by the House of Commons transport committee, a cross-party team of MPs, said. (bit.ly/VjQ1Yk)

The report is part of the government’s effort to bring down the cost of keeping vehicles on the road.

The report offers some respite to Britain’s car insurance industry, which has been grappling with the prospect of potential government reforms that could push already dragging motor premium rates down further.

“(We) believe this will result in a drop in the number of false claims,” a spokeswoman at Direct Line Insurance Group , Britain’s largest motor insurer, said.

“In addition to this proposal, we believe there needs to be tighter timescales on making a minor injury claim and are calling for a 90-day reporting period to defendants,” she added.

According to data from the Association of British Insurers (ABI), an insurance body whose members manage assets worth a quarter of the British economy, fraudulent motor insurance claims were the most expensive and common types of claims.

Fraudulent motor insurance claims spiked 34 percent in 2013, the ABI said. (bit.ly/1pDFxMX)

Direct Line’s London-listed shares rose to 283.6 pence, their highest since October 2012, when the company was spun out of RBS. Citi upgraded the stock to “buy”, saying Direct Line had the potential for competitive pricing advantages over its peers. (Reporting by Esha Vaish, Karen Rebelo and Richa Naidu in Bangalore; Editing by Andrew Hay and Gopakumar Warrier)

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