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Press Release

Press Releases

MOJ: Government action on whiplash claims

Ministry of Justice press release

Drivers struggling with rising insurance premiums will see Government action today as Justice Secretary Chris Grayling unveils new plans to tackle the huge number of whiplash claims which have been pushing up costs.

Mr Grayling today launched a consultation on new measures to bring down the number and cost of whiplash claims, including speculative and fraudulent applications. There were more than half a million whiplash claims last year and insurers estimate they add £90 a year to the average motor insurance policy.

The Government is consulting on:

- Creating new independent medical panels to improve diagnosis of whiplash injuries. This will ensure that genuine claims can still go ahead, but exaggerated, misrepresented or fraudulent claims are robustly challenged.

- Options to allow more whiplash cases to be challenged in the small claims court - to change the current position where it can be cheaper for insurance companies to accept questionable claims than to contest them.

The Government has taken action after figures showed there had been a 60% rise in personal injury claims related to road accidents since 2006, despite vehicles becoming safer and a 20% reduction in the number of reported accidents over the same period.

Justice Secretary Chris Grayling said:

"For too long honest drivers have been bearing the price of a system that has been open to abuse and it is time for that to change.

"We are proposing action to support effective whiplash diagnosis by medical experts and to simplify procedures which will help bring speculative or fraudulent claims before a judge - so genuine claims can still be settled but fraudsters are left in no doubt there will be no more easy paydays."

These changes are designed to tackle the excessive legal costs which too often mean it is cheaper for insurers to settle whiplash claims even if they suspect they are bogus - leading to higher premiums for all motorists.

This is latest stage of a series of significant civil justice reforms by the Government, designed to reduce legal costs and stop the growth of compensation culture in England and Wales.

Today's consultation complements law changes which will come into effect in April 2013. These include:

- Rebalancing no-win no-fee deals so losing defendants will no longer have to pay a success fee or legal insurance premium to the claimant's lawyer.

- Banning "referral fees" where companies can profit from selling on someone's personal injury claim

- Stopping claims management companies from offering money or goods as an inducement to make a claim through them.

The insurance industry has committed to passing on savings to consumers made from the Government's reforms to civil litigation costs. They estimated that whiplash claims cost £2bn in 2010 (£90 per policy).

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