Crackdown on whiplash claims could cut insurance premiums by £35 a year
Ministry of Justice proposals include cap on claim payouts and medical evidence requirements
A new Civil Liability Bill has been unveiled by the Ministry of Justice which aims to crackdown on insurance fraud up and down the country, with tougher new measures proposed concerning fraudulent whiplash claims.
Under the new proposals a fixed cap will be put on claims, as well as a ban on the practice of looking for or offering to settle whiplash claims if there’s no medical evidence to back up an injury.
If the proposed Bill is passed, it will come into effect by April 2019 – and the average motorist will save an estimated £35 a year.
In the past, proposals have included limiting the amount people can claim for minor whiplash injuries and as a result, the average payout dropped from £1,850 to £425.
It’s been suggested that past estimates concerning both fraudulent and legitimate whiplash claims can total an extra £90 for the average cost of an insurance premium in the UK.
These new measures should save around £1 billion and insurers have promised to pass on the savings to motorists.
Also included in the Bill is changes to the way the personal injury discount rate is calculated – a percentage rate is used to adjust the compensation based on how much a victim might possibly earn by investing a payout.
The UK Government reduced the discount rate in February last year from 2.5% to minus 0.75% and as a result insurance premiums rose on average by £75, with younger drivers hit the most.
The Ministry of Justice is now proposing to set the rate “to ‘low risk’ rather than ‘very low risk’ investments at present, better reflecting the evidence of the actual investment habits of claimants.” They would also like to review the rate regularly.
“The number of whiplash claims has been too high for too long, and is symptomatic of a wider compensation culture,” said Justice Secretary David Gauke, adding: “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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