Motor claims reform in the UK has entered a critical phase, with new systems and incentives shifting the landscape for insurers, claimants, and fraudsters alike. While the introduction of the Official Injury Claim (OIC) Portal aimed to streamline whiplash claims and reduce costs, the reforms have exposed new challenges around access to justice, claims inflation, and increasingly sophisticated fraud.
"Claim volumes have dropped to their lowest in 20 years," said Donna Scully (pictured), director at Carpenters Group, noting a 50% reduction compared to pre-pandemic levels. "But many legitimate claimants are not pursuing their rights due to the complexity of the OIC Portal and lack of affordable legal advice."
The whiplash reforms, which raised the small claims track limit and introduced fixed compensation tariffs, have successfully made minor injury claims less financially attractive to fraudsters. However, Scully warned this has redirected fraud elsewhere.
"We’re seeing a perceived increase in 'mixed injury' claims and disputes over injury plausibility," she said. "This opens a new battleground between claimants and insurers that the OIC Portal isn’t designed to handle."
Other aspects of motor claims, such as credit hire and repair costs, have become prime targets. "Fraudulent attention has shifted to areas like damage inflation and credit hire, aiming to extract maximum value from each claim."
Despite these changes, premiums remain high. According to Scully, this is due to a combination of inflation, parts shortages, and the rising cost of vehicle repairs and theft, prompting the government to form the Motor Insurance Taskforce. "But that initiative appears to have progressed without any claimant representation, which of course we are disappointed with" she said.
Fraud in UK motor claims reached record levels in 2024, with more than 421,000 cases flagged in the National Fraud Database, and the ONS reporting nearly 4 million fraud offences. What's changed, according to Scully, is the profile of the fraudster.
"We’re seeing previously honest consumers exaggerating legitimate claims or fabricating new ones due to the cost-of-living crisis," she said. "Insurers are often seen as deep-pocketed and fair game."
She noted the rise of ghost broking scams, especially targeting younger drivers via social media. "Bogus insurance products advertised online are tricking people into thinking they’re covered when they’re not. The IFB has rightly focused on this with targeted campaigns."
To manage this shifting landscape, Scully called for a multi-pronged approach. "Investment in technology, particularly AI and machine learning, is vital to detect fraud early and improve efficiency," she said.
At the same time, industry collaboration must improve. "Sharing intelligence across insurers, brokers, and law enforcement can help identify fraud patterns and networks," she added.
But the human element matters too. "Maintaining high standards of service, even for small claims, is essential to avoid alienating genuine claimants."
Claims inflation and the growing sophistication of fraud, including the use of deepfakes, will test the industry’s adaptability. Meanwhile, climate-related claims and cyber threats add further complexity.
Opportunities lie in digital transformation, including the use of telematics and predictive analytics. But even AI is a double-edged sword. "Fraudsters aren’t bound by regulation and can deploy technology faster than insurers can respond," she said. "Investment in counter-AI tools is now a necessity."
Scully believes regulators must act more decisively. "There’s still a lack of understanding about how quickly fraudsters adapt. Prevention must come before cure."
With the OIC Portal under review and industry groups calling for formal governance, the next phase of reform will be crucial. "This is a pivotal moment," Scully said. "We need agile regulation, effective enforcement, and a renewed focus on fairness and resilience in motor claims."
