New whiplash payout reforms could save motorists money on insurance ~ station of gear

Motorists could see their insurance premiums fall by £40, according to a new proposed crackdown on whiplash claims

2016-11-17 09:45

Millions of motorists could see their car insurance drop by around £40 after the Government announced a new crackdown on whiplash claims that unfairly inflate insurance premiums.

The Ministry of Justice has launched a consultation on proposals to reduce the high number of whiplash claims made by motorists. Insurers have vowed to pass 100 per cent of the savings back to the consumer, worth around £1 billion in total.

Despite a persistent fall in the number of road accidents in the UK, whiplash claims have surged by 50 per cent in the last decade. Experts believe the rise has been fuelled by predatory and fraudulent claims, driving up the cost of insurance for honest motorists. Most recent estimates place the average cost of car insurance at around £697 in the UK.

• Average car insurance premiums to pass £700 this year

Part of the new proposals includes limiting the amount people can claim for minor whiplash injuries. The new claims cap would see the average pay-out fall from £1,850 to a maximum of £425, and the victims would have to provide a medical report from a MedCo accredited medical expert before receiving the payout.

The consultation also looks to introduce a transparent tariff system of compensation payment for claims with more significant injuries and wants to ban all offers to settle claims without medical evidence. The Ministry of Justice also has its eyes set on raising the limit for cases in the small claims court for all personal injury claims from £1,000 to £5,000. The consultation will run until 6 January 2017.

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.

• Why is your car insurance premium so high?

“These reforms will crack down on minor, exaggerated and fraudulent claims. Insurers have promised to put the cash saved back in the pocket of the country’s drivers.”

Paul Geddes, chief executive officer at Direct Line Group, an insurer backing the scheme, said: “We are very pleased that the Government has finally published the consultation paper on whiplash reform. We have been calling for legislation to reduce the number of spurious injury claims while ensuring those genuinely injured in an accident are compensated accordingly. This sends a strong signal about Ministers' willingness to clamp down on what has clearly become a broken compensation culture in this country.”

What do you think of the proposed reforms? Tell us in the comments below...

Martin Saarinen

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