Contrary to reports earlier this year, the Government has announced it is to press ahead with a crackdown on the payment of compensation for whiplash injuries. The proposals could have a major impact on claims management companies and personal injury lawyers who handle motor accident claims.

The Ministry of Justice (MoJ) is consulting on two proposals: ending the right to cash compensation for minor whiplash injuries altogether, or capping compensation for this type of injury at £425. The current average payout for whiplash is £1,850.

The Government also intends to raise the upper limit for personal injury cases handled by a small claims court from £1,000 to £5,000; and introduce a new requirement under which whiplash claims cannot be settled without a report from a MedCo accredited medical expert. The first of these proposals will also affect claims made for issues other than whiplash.

Justice Secretary Elizabeth Truss MP 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 to the Treasury Simon Kirby MP said:

“One whiplash claim is paid out every 60 seconds and it is unacceptable that responsible motorists have to pick up the tab.

“We are tackling the incentives which have created this compensation culture so that all drivers can save money on their motor insurance policies.”

Whiplash claims have risen by 50% over the past decade, despite a substantial decrease in road accidents over the same period, leading to suggestions that bogus and exaggerated claims are being made.

The MoJ says that a number of major insurance companies have agreed to pass on the money they will save to their customers, resulting in a £40 reduction in the average annual car insurance premium.

Mark Wilson, chief executive of Aviva, said:

“Fraud is not a victimless crime and law-abiding motorists have paid for the UK’s dysfunctional and fraudulent motor claims system through inflated motor premiums for too long. Let me be clear: Aviva will pass on 100 per cent of the savings to our customers.”

It had been suggested that the fact George Osborne MP was no longer Chancellor, and the need for Government lawyers to devote their attention to Brexit-related issues would mean the whiplash clampdown would be put on hold. It now appears that this is not the case.

A spokesperson for law firm Thompsons Solicitors criticised the proposals, saying:

“Despite government figures showing that the number of injury claims are down, they have allowed themselves to be bullied by insurers into reviving hugely unfair plans to remove access to justice for the injured, without producing a shred of evidence to justify them.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.