New legislation to impose a limit on the size of whiplash claims and crack down on fraudulent claimants has been announced.
The Civil Liability Bill will make it illegal to make a whiplash claim without medical evidence and will restrict the maximum amount per claim to £425. These moves are expected to save the insurance industry £1 billion, which equates to a saving of £35 for each UK motorist.
Insurance companies have been calling for changes to the law for some time. Some insurers, including Aviva and LV, have already pledged to pass 100% of the savings on to motorists.
The Ministry for Justice, which is leading the crackdown on whiplash claims, says that despite the UK having some of the safest roads in Europe, the number of whiplash claims has risen by 50% in the past 10 years. The Government body is blaming the rise on a "predatory" industry that encourages motorists to submit minor, exaggerated or fraudulent claims, saying that the cost of settling such claims has driven up insurance premiums for everyone.
What are the proposals?
The proposed legislation will cap the amount you can claim for a minor whiplash injury - doing so would reduce the average whiplash pay-out from £1850 to a maximum amount of £425.
You'll also need a medical report as a proof of injury - and that will only be obtainable from a MedCo doctor rather than from your GP. MedCo doctors are independent experts in assessing whiplash claims. This would also bring an end to offers from companies to settle claims without medical evidence.
Alongside these changes, the current limit for personal injury claims in the small claims court will also be raised from £1000 to £5000, thus reducing legal costs. A tariff system for compensation will also be introduced for more significant injuries.
Announcing the proposals, Justice secretary David Gauke said: "This important legislation will ensuring that whiplash claims are no longer an easy payday. The bill will seek to set fixed amounts of compensation for whiplash claims and halt the practice of settling claims without medical evidence."
Former Chancellor of the Exchequer George Osborne first proposed a crackdown on whiplash claims in his 2015 autumn statement.
What is whiplash?
Whiplash is a neck injury caused by a suddent movement of the head - such as the type experienced during a car crash. The muscles in the neck become stretched or sprained, and the injury is often characterised by neck pain, stiffness and headaches. The condition will often get better on its own within a few weeks - but during that time some people find it can limit their movement, and therfore have to be signed off from work.
Because whiplash is hard to diagnose - and its symptoms and causes are so widely known - some people are able to submit fraudulent claims.
Speaking to What Car?, ABI spokesman Malcolm Tarling said: "If you're a person who wants to get money from the system, this would be your best way of doing so.
"We want to make it harder for people who are playing the system - at the moment it's [the public] who are paying for it."
When will I start to save money?
You're not likely to get any real savings until later this year at the eariiest because the legislation has to be approved by Parliament before it can become law.
Insurance industry analyst Consumer Intelligence says the first thing motorists should notice when the new measures come into force is a reduction in nuisance calls offering to handle whiplash claims. The company's chief executive Ian Hughes said customers will want to shop around to make sure their insurer is indeed lowering premiums in line with savings."
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