The Ministry of Justice today (17 November 2016) launched a consultation on proposals which will reduce the unacceptably high number of whiplash claims and allow insurers to cut premiums. Insurers have pledged to pass on savings to drivers - worth a total of £1 billion.
Whiplash claims are 50% higher than a decade ago, despite the UK having some of the safest roads in Europe and a fall in the number of accidents. This has been fuelled by a predatory claims industry that encourages minor, exaggerated and fraudulent claims, driving up the costs of insurance premiums for ordinary motorists.
The consultation paper outlines plans to scrap the right to compensation or put a cap on the amount people can claim for minor whiplash injuries. Capping compensation would see the average pay-out cut from £1,850 to a maximum amount of £425. Compensation would only be paid out if a medical report was provided as proof of injury.
Other measures include:
- introducing a transparent tariff system of compensation payments for claims with more significant injuries
- raising the limit for cases in the small claims court for all personal injury claims from £1,000 to £5,000
- banning offers to settle claims without medical evidence. All claims would need a report from a MedCo accredited medical expert before any pay out.
Justice Secretary Elizabeth Truss said:
For too long some have exploited a rampant compensation culture and seen whiplash claims an easy payday, driving up costs for millions of law-abiding motorists.
These reforms will crack down on minor, exaggerated and fraudulent claims. Insurers have promised to put the cash saved back in the pockets of the country’s drivers.
The government’s commitment to tackle the whiplash epidemic has previously been welcomed by the Association of British Insurers (ABI), with leading insurance firms including Aviva and LV= pledging to pass 100% of savings onto motorists.
Economic Secretary Simon Kirby said:
One whiplash claim is paid out every 60 seconds and it is unacceptable that responsible motorists have to pick up the tab.
We are tackling the incentives which have created this compensation culture so that all drivers can save money on their motor insurance policies.
Notes to Editors
- Today’s announcement delivers on the government’s pledge to tackle the high number and cost of whiplash claims as made by the former chancellor in his 2015 autumn statement.
- The latest ABI premium index, which was published on 31 October 2016, reports that the annual premium paid rose in the third quarter by 9% compared to the same period in 2015. This means that the average premium paid in the third quarter of 2016 is £440.
- These new reforms will build on significant steps already taken by this and the previous government to reduce legal fees and to strengthen medical evidence. All claims would need a medical report provided by a MedCo accredited medical expert before any pay out.
- The consultation will run until 6 January 2017.
- For more information or interview requests please call the Ministry of Justice Press Office 0203 334 3529