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Car insurance premiums are set to rise due to a new fraud trend that could end up costing insurers more than whiplash.
Each driver’s car cover costs rose by around £90 a year during the peak of fake whiplash claims, which cost insurers £2bn annually until the Government stepped in to help cut costs.
But now insurers and lawyers report seeing a rise in the “new whiplash” – fake claims for tinnitus, an ear condition where genuine sufferers hear invasive noises.
The Telegraph understands insurers are already passing on the cost of fake tinnitus claims to drivers through premiums, and that the industry is working to calculate how much these claims are costing drivers.
It impacts drivers in another way: if one motorist is involved in a crash where the other driver makes a tinnitus claim, they will lose their no claims discount and see their premiums rise.
Tinnitus can be caused by exposure to very loud noises. If this happens as a result of a car crash, sufferers are entitled to claim on motor insurance for the costs of care.
These claims are greater than whiplash and can reach £120,000, according to Paul Holmes of law firm DWF.
Whiplash claims rarely exceed £5,000, whereas even a mild tinnitus claim will range between £6,450 and £11,040, according to legal payout guidelines.
David Williams, of insurer Axa, said: “I have never seen a tinnitus claim settled for less than double a whiplash claim.”
Tinnitus claimants can bump up the cost of payouts by “layering” claims and saying they need extra cash for a bolstered list of needs. This can include hearing aids for life, treatment for post-traumatic stress disorder, therapy, white noise generators and special tinnitus pillows.
Mr Williams said tinnitus claims are being driven by claims firms that profited from encouraging spurious whiplash cases and taking a slice of the payouts.
The Government intervened on the whiplash crisis by bringing in rules on how much whiplash claims can cost, which kick in from April 2020. At the same time, a new portal for whiplash claims will launch to cut legal bills by letting customers handle their own cases.
Unscrupulous claimant lawyers know the steady stream of cash from whiplash cases is coming to an end, and want a replacement.
Tinnitus is a good alternative, because, like whiplash, it is diagnosed based on the individual describing their symptoms and cannot be verified by a doctor. This makes it hard for insurers to sift out the false claims from the genuine ones.
Insurers are concerned the steady rise in tinnitus claims they have seen for twelve months will accelerate in April.
“My big concern is that when the whiplash changes come in next year, the number of tinnitus claims will go up,” Mr Williams said.
Car insurance premiums are already due to rise by up to £75 a year after the Government changed the rules on how much insurers must pay victims of serious crashes in July.
Drivers with a dashcam or telematics black box fitted have a good chance of fighting dodgy tinnitus claims, as the devices can easily show the severity of a crash.
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