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Crackdown on whiplash ‘epidemic’ could save drivers £40 a year

Paloma Kubiak
Written By:
Paloma Kubiak

The government has outlined proposals to scrap or cap compensation pay outs for whiplash claims in a bid to save millions of motorists a total of £1bn on their car insurance.

Whiplash claims are 50% higher than a decade ago and this has been fuelled by a “predatory claims industry” that encourage minor, exaggerated and fraudulent claims, driving up the cost of insurance premiums, according to the Ministry of Justice (MoJ).

It has today published a consultation on proposals to reduce the “unacceptably high number” of whiplash claims in a bid to cut insurance premiums by £40 a year at a total saving of £1bn.

The consultation paper which runs until 6 January 2017, outlines plans to scrap the right to compensation or to put a cap on the amount people can claim for minor whiplash injuries.

This move could see the average compensation pay out cut from £1,850 to a maximum amount of £425. Further, compensation would only be paid out if a medical report was provided as proof of injury.

It has also proposed the following measures:

  • 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.”

Michael Lloyd, the AA’s director of insurance, said the 750,000 whiplash injury claims out of a total of 800,000 claims registered with MoJ is “frankly shocking” so it’s little wonder that the UK is “shamefully regarded as the whiplash capital of the world”.

He said: “We would also like to see the banning of injury compensation altogether for very minor collisions and payment of compensation mostly in the form of care, such as physiotherapy, rather than all in cash.”

According to the Association of British Insurers’ (ABI) latest index, annual premiums rose in the third quarter by 9% compared with the same period in 2015. This means the average premium paid in the third quarter of 2016 is £440.