Monday, July 27, 2015

Inflated injury claim

A doctor told me that the injury claims under motor insurance are grossly inflated. His son had an accident recently. There were minor damages to the vehicles. He received a claim from the third party asking for $50,000 (or thereabouts) in injury claims for medical expenses, pain and suffering and loss wages.

The claim is grossly inflated and unjustified. But this case will be argued in court leading to a lot of wasted time and legal fees.

As a doctor, he receives requests from lawyers to submit reports for these claims. It takes a lot of his time and he has to bill the lawyer for the report. It seems to be a waste of time. Many of these cases involve whiplash injury, which is quite subjective.  Is there  a better way for such claims to be handled?

The problem of inflated injury claims has been around for decades. In recent years, it must have got much worse. This is clearly a matter that requires the government to step in and find a way to address the issue through legislation or regulation.

The payment of these injury claims add to the cost of motor insurance. Consumers should ask the government to address this problem, and bring down the premiums charged.

In some countries, e.g. Sweden, they write a law to spell out how injury claims should be compensated. This is done by an independent assessor working under the law. In most cases, the decision of the assessor is taken as fair. It reduced legal cost significantly.

We should adopt such a system and support it with a database of past claims to guide the assessor. If the assessment is disputed, it can go through a review where another 1 or 2 assessors are appointed to make their assessment. 

To ensure that the assessment is done impartially, the identify of the assessor and the claimant should be kept hidden until the assessment has been completed. The assessment should be done based on the facts of the case, and not the identity of the party involved. 

As this has been a serious matter for many years, it is useful for the authority to take the lead to implement such a system or to find a practical solution.

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