The number of motorists making whiplash-type claims has returned to near record levels and now costs drivers £93 extra in insurance premiums.
The UK is on course to have lodged 2,300 motor injury claims a day in the year to April 2015 – an increase of 200 per day, or 9%, during the previous year.
Some 80% of claims insurer Aviva received in 2004 included whiplash, which the company said was "a significantly higher figure than seen in many other European countries".
In France, whiplash accounts for just 3% of such claims, while in Germany the figure rises to 47% but is still far less than what Aviva is seeing in the UK.
Huge financial incentives
The reason for the difference is clear, said the insurer, citing "the huge financial incentives for the third parties who submit the claims".
For example, in the UK, lawyers are able to charge fixed fees of £500 plus a further 25% of 'contingency fees', while in Germany fees are fixed at 300 euros (£216).
Aviva found that 96% of the personal injury claims it dealt with last year were brought by third parties, which include claims management companies, personal injury lawyers and alternative business structures.
The company said "fundamental reform is needed to reduce the number and cost of whiplash claims which will, in turn, cut the cost of motor insurance for the long term".
Specifically, it believes that a change in approach, which it refers to as "care, not cash", is part of the solution.
It said insurers should provide treatment of up to three months to their policyholders or the injured party no matter who is at fault for the accident.
1 million wasted
In February, it emerged that whiplash fraudsters waste 1 million NHS hours a year. NHS doctors see around 116,000 patients they suspect are exaggerating or feigning whiplash injuries to claim compensation fraudulently every month.
To try to cut down on the UK's whiplash compensation culture, the government has set up a new medical reporting panel, MedCo. From 1 April, all those attempting to claim compensation for whiplash will have to get a medical report from an accredited MedCo professional.
In the AA's view, the government's previous reforms designed to improve whiplash fraud – such as the LASPO Act 2012 and the reduction in fixed recoverable costs – didn't go quite far enough. It added that many claims management firms who had been deregulated as a result have since re-emerged as 'marketing companies' looking encouraging potential claimants.
The motoring organisation said it fully supports Aviva's position on reform and thinks the introduction of MedCo – although it believes "the medical panel should consider the circumstances of a collision to ascertain the likelihood of whether an injury was likely".
Janet Connor, managing director of AA Insurance, said: "It's unacceptable that honest motorists are footing the bill for those who think it's OK to claim for an injury that may never have happened.
"Unfortunately, the number of nuisance calls from claims management firms encouraging people to make claims for minor collisions that might have happened anything up to three years previously, has also sharply risen. AA's own research shows that two-thirds of motorists have been contacted by such firms in the past year."
The AA's said motor premiums have started to rise after two years of falls and now stand at £540, up from a low of £532 in July 2014 for a typical comprehensive motor insurance policy.