Ministers are promising a new crackdown on ‘exaggerated and fraudulent’ whiplash claims, with proposals that they say will allow insurance companies to cut premiums by up to £40 a year.
The Ministry of Justice (MoJ) has launched a consultation on Reforming the Soft Tissue Injury (‘whiplash’) Claims Process in England and Wales.
It said proposals in the paper would reduce the ‘unacceptably high’ number of whiplash claims and that insurers have pledged to pass on savings to drivers.
The MoJ said whiplash claims are 50% higher than a decade ago, ‘fuelled by a predatory claims industry’, despite a fall in the number of accidents.
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.’
The consultation includes proposals to remove the right to compensation for pain, suffering and loss of amenity (PSLA) or cap the amount people can claim for PSLA to £425, compared to an average of £1,850. Compensation would only be paid out if a medical report provided proof of injury.
Other measures include:
- 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 an accredited medical expert before any payout.
James Dalton, director of general insurance policy at the Association of British Insurers (ABI), said the ABI would ‘need to study proposals carefully’.
He said: ’The insurance industry has campaigned long and hard to tackle the impact of whiplash-related claims on honest motorists, so we welcome these proposals. Introducing a range of measures, such as limiting the compensation payable for these injuries, will help create a more honest system that doesn’t reward those who want to exploit it.’
Neil Sugarman, president of the Association of Personal Injury Lawyers criticised the proposals. He said: ‘In a society where no-one bats an eyelid about claiming compensation for a late train or being mis-sold an insurance policy, the idea that injured people should be treated as some kind of second class citizens simply beggars belief.’
The consultation follows an announcement in the 2015 Autumn Statement from chancellor George Osborne and previous attempts by ministers to crackdown on 'compensation culture'.