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Motorists could see their premiums reduce by £35 – £40 a year if insurers pass on expected savings following a deep overhaul of the way whiplash claims following vehicle accidents are handled.
The rule changes, effective 31 May, will limit pay-outs, require medical reports and reduce legal costs by introducing a DIY claims portal for those making a claim.
Insurers say whiplash claims cost them – and the policyholders to whom they pass on the costs – around £2 billion a year, around £90 per driver. Rooting out exaggerated and fabricated claims will lead to savings estimated at up to £40 per policy.
Companies say they will reflect any savings derived from the changes in lower premiums.
Whiplash (soft tissue injury caused by a sudden movement of the head) claims have long been a source of controversy, especially as the number of claims has risen steadily despite improvements in vehicle safety and a long-term decline in the number of road traffic accidents.
Around 1,500 whiplash claims are made every day in the UK.
There has been sustained criticism by the insurance industry of claims management firms who encourage people to pursue claims. These firms are often remunerated with a percentage of the claims pay-out.
The government said of the rule changes: “The reforms will apply to low-value personal injury claims arising from a road traffic accident, including whiplash injuries. This means that claimants will have the opportunity to settle these small personal injury claims without the need to go to court or for legal representation.
“From 31 May 2021, claimants will make claims using theOfficial Injury Claim Service. For claimants who do not have access to, or are unable to use the online service, assistance will be available via the Portal Support Centre by calling 0800 118 1631.”
The Whiplash Reform Programme measures include:
- the introduction of a fixed tariff of compensation exclusively for pain, suffering and loss of amenity for whiplash claims up to a duration of two years. This tariff, which is significantly lower than the current arrangements, will determine the personal injury damages claimants will receive for whiplash injuries.
- a ban on settling whiplash claims without medical evidence. The Official Injury Claim Service will enable claimants to source medical reports to ensure claims are supported by medical evidence before settlement.
- changes to the way legal cases are handled so that parties are responsible for paying their own legal costs, rather than requiring the losing party to pay all costs associated with the case. Legal representations will now be possible only on claims valued at £5,000 or more, rather than £1,000.
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Kevin PrattEditor
I am the UK editor for Forbes Advisor. I have been writing about all aspects of household finance for over 30 years, aiming to provide information that will help readers make good choices with their money. The financial world can be complex and challenging, so I'm always striving to make it as accessible, manageable and rewarding as possible.
