After months of rowdy speculation, the Ministry of Justice has finally released an update on whiplash compensation reform – quietly tucked away amid its announcement of a massive prison overhaul.
It has now been confirmed by the MOJ that there will be fixed tariffs meant to cap compensation pay-outs for whiplash-related injuries – the claims limit for whiplash injury will be set at £5,000 with a threshold of £2,000 relating to other personal injury claims. There will also be a total ban on personal injury claims without medical evidence.
According to the MOJ the decision has the potential to cut car insurance premiums by as much as £40 a year and can help “crack down on the compensation culture epidemic.”
The announcement has already received widespread approval from insurance firms with Andy Watson, chief executive of Ageas UK, reaching out to Insurance Business to express his approval at the decision.
“There is still far too much money needlessly moving through the legal system after a car crash,” he said. “It encourages fraud and exaggeration, and leads to excessive costs for honest customers.
“In the Government’s consultation we called for fixed levels of general damages for minor whiplash injuries and that the small claims limit be increased to £5,000. We’re very pleased these suggestions have been taken on board and urge the Government to bring in all the measures together as soon as possible so that we can reduce the cost of whiplash once and for all.”
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There were similar comments from AXA Insurance technical director David Williams who pointed out that there are savings to be made for honest motorists.
“Being able to claim thousands of pounds for minor whiplash injuries that are almost impossible to verify is absolutely ludicrous and has only served to indulge the actions of claims management companies and fuel the rise of ‘a have a go’ compensation culture in the UK,” he said.
“By drastically reducing the cash incentive for these claims the Government has taken a strong stand in favour of honest motorists who will now save around £40 on their motor insurance premiums.”
The news has not been welcomed by all, however, with Andrew Twambley, spokesperson for the Access 2 Justice campaign, stating that the government has “driven a horse and coaches” through the principal of insurance.
“We are extremely disappointed that the government seems hell bent on removing the rights of ordinary people to gain redress for injuries that weren’t their fault,” he said. “Increasing the small claims limit to £5,000 discriminates against ordinary people suffering whiplash injuries and will open the doors for claims management companies and cold callers to wreak further havoc on the market.
“The government has not even waited to issue a response to the consultation exercise, confirming that it is uninterested in due process and deaf to the serious concerns raised by legal firms, the judiciary and consumer groups.
“Insurers will be rubbing their hands in glee. They have the government in their pocket, and will themselves be pocketing any savings made, for themselves and their shareholders.”
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