Industry bodies react to government whiplash reforms

Two leading organisations in the insurance industry have responded to the government’s plan to raise the small claims track limit and cap the level of damages that can be claimed for whiplash.

 

On Thursday, the Ministry of Justice announced that there will be fixed tariffs meant to cap compensation pay-outs for whiplash-related injuries. It said the reforms could cut car insurance premiums by as much as £40 a year and can help “crack down on the compensation culture epidemic.”

 

The whiplash reforms are part of the government’s Prisons and Courts Bill that has been introduced to parliament.

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“The reforms to whiplash claims set out in the Bill cannot come soon enough,” said James Dalton, director of general insurance policy of the Association of British Insurers (ABI).

 

Dalton said the current insurance claims system is “riddled with exaggerated and fraudulent claims” from which claimant lawyers have been “profiting handsomely.”

 

“The gravy train must stop,” he said. “Motorists know that the UK’s roads have been getting ever safer, so why have whiplash style claims been rising?”

 

“People want an insurance claims system that provides compensation and support to those who genuinely need it,” Dalton added. “What they don’t want is to be plagued by spam calls and texts from ambulance chasers, while personal injury lawyers continue to profit from a broken system in urgent need of reform.”

 

The Insurance Fraud Bureau (IFB) echoed the ABI’s statements, saying the government’s whiplash reforms could help curb “crash for cash” scams.

 

“In taking some of the excess cash out of the system, we hope that it will help to positively influence the level of ‘crash for cash’ fraud that we see,” said IFB director Ben Fletcher.

 

Fletcher said organised crime groups have orchestrated “crash for cash” scams because they are perceived as having low risk and high reward.

 

“It’s due to the amount of money in the system that fraudsters are perceiving this as an easy target and exploiting it, netting upwards of tens of thousands of pounds,” Fletcher said. “By reducing the amount of excess money in the system, we hope to see a positive effect in helping to tackle these scams, as the criminals recognise that the risks are higher and the rewards are lower than they once were.”

 

According to Fletcher, the industry’s efforts against crash for cash scams have so far led to 1,190 arrests and 498 convictions of fraudsters.