Government says insurers will pass on £1 billion of savings if whiplash claim reforms go through

The Ministry of Justice (MoJ) has said that insurers will be able to pass on £1 billion worth of savings if its proposals to reduce the number of whiplash claims go through.

A consultation paper released today 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, according to the Government. Compensation would also 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 and raising the limit for cases in the small claims court for all personal injury claims from £1,000 to £5,000.

In a statement the MoJ said that 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. It said that this rise had been fuelled by a “predatory claims industry” that encourages “minor, exaggerated and fraudulent claims” which has driven up the costs of insurance premiums for ordinary motorists.

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.”

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.”

The consultation will run until 6 January 2017.

Mark Dugdale