New whiplash reforms could reduce insurance premiums by £35

New whiplash reforms could reduce insurance premiums by £35

- in Car Insurance, News
car crash rear end whiplash

Proposals to cut whiplash fraud from the Ministry of Justice include caps on claims and a requirement to show medical evidence.

A new Civil Liability Bill has been unveiled by the Ministry of Justice that aims to get to grips with UK insurance fraud by implementing tougher measures on fraudulent whiplash claims.

The Bill proposes new fixed caps on claims and bans the practice of settling whiplash claims without producing medical evidence.

It is estimated that the Bill will save motorists an average of £35 per year on car insurance premiums, and is expected to come into force by April 2019.

Previous proposals to tackle fraudulent whiplash claims have included limiting the number of people who can claim for minor whiplash injuries, which has seen the average compensation payout fall from £1,850 to £425.

Estimates suggest that whiplash claims – the legitimate ones and the fraudulent ones – can increase car insurance premiums by as much as £90 per year. The new measures outlined in the Civil Liability Bill are expected to save approximated £1 billion, which insurance companies have promised to pass on to motorists.

The new Bill also features a change to the way the personal injury discount rate is calculated. The discount rate is used to adjust compensation payouts based on how much the victim could earn by investing their payout.

Last year the Government reduced the rate from 2.5% to -0.75%, which led to insurance premiums rising by an average of £75, with young drivers being hit the most.

The Ministry of Justice is now proposing to set the discount rate to ‘low risk’ rather than ‘very low risk’ investments, which will better reflect the actual investments made by claimants.

Justice Secretary David Gauke said:

The number of whiplash claims has been too high for too long, and is symptomatic of a wider compensation culture.

We are putting this right through this important legislation, ensuring whiplash claims are no longer an easy payday and that money can be put back in the pockets of millions of law-abiding motorists.



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