Lord Chancellor announces outcome of whiplash tariff review; critics say it’s not enough

Government raises whiplash compensation tariffs by 15%, sparking criticism from personal injury lawyers who say it fails inflation benchmarks.

Shabana Mahmood, Lord Chancellor and Secretary of State for Justice, has announced the conclusions of the first statutory review of the Whiplash Injury Regulations 2021. The government has outlined adjustments to the controversial tariff for whiplash injuries and related claims.

In her statement to Parliament, Mahmood said the existing structure for whiplash compensation will stay mostly the same. There are two parts to the tariff: one for whiplash-only injuries and one for whiplash with minor psychological injuries (such as anxiety). These will not change. However, the amount of compensation will go up by about 15% to account for inflation since 2021 and to include forecasted inflation until May 2027, when the next review is expected.

Despite this adjustment, no changes will be made to definitions of medical evidence or the judicial uplift of up to 20% for exceptional circumstances.

The decisions aim to strike a balance between fair compensation for claimants, and a wider-reaching goal of cost containment in the insurance market.

The official report has been formally submitted and made available for Members of Parliament (MPs) and Lords in both Houses of Parliament. Further consultations, including with the Lady Chief Justice, will need to take place for the Lord Chancellor to determine when these changes will be implemented.

APIL criticises tariff increase as insufficient

The Association of Personal Injury Lawyers (APIL) has decried the 15% increase, arguing that it will leave injured people worse off in real terms than when the tariff began in 2021.

Kim Harrison, APIL president, stated, “A 15% increase is not enough. If the Lord Chancellor were simply to increase the actual tariff, as introduced, in line with inflation using the Consumer Price Index, rather than making convoluted predictions about future inflation, the increase to damages in the tariff would be 22%.”

Harrison described the current tariff as “insulting” and “arbitrary”, arguing that injured people are losing out while insurers are saving money and charging higher premiums for car insurance.

“The facts are that since the tariff came into effect, the number of claims has plummeted, the cost of injury claims to insurers has nosedived, and yet motor premiums have continued to rise,” Harrison said.

Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (ACSO), commented, “We also still don’t know whether the whiplash reforms have led to any of the promised savings for motorists, and so eagerly await the FCA report on this. In the meantime, and given record average premiums, the only winner seems to be the insurance industry.”

The Treasury’s upcoming report on the effects of the 2021 reforms, required by the Civil Liability Act, could shed further light on the tariff’s impact on policyholders.

What happens next?

The decision to adjust the tariff by a figure below APIL’s recommendations highlights the persistent tension between claimant advocacy groups and government policy.

The new compensation rates are meant to balance fair payments for injured people while keeping costs low for insurers. However, critics believe the current changes are not enough.

The government will hold more discussions before deciding when the changes will start. Meanwhile, the debate about whether the whiplash tariff is fair is likely to continue.

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Josie Geistfeld Josie is an editor for Claims Media. She welcomes feedback, comments, and opinion at josie.geistfeld@barkerbrooks.co.uk