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Whiplash reforms: the insurance industry reacts

Whiplash reforms: the insurance industry reacts

Whiplash reforms: the insurance industry reacts It’s finally happened. After months of talks and anticipation, now millions of motorists could finally see their car insurance premiums reduced as plans were revealed to cut compensation for whiplash injuries.

It is estimated that customers may benefit in the region of £40 a year as the Ministry of Justice unveiled proposals that suggest that whiplash payments – which are separate from loss of earnings or medical bills – could be banned or capped at a maximum level of £425, significantly below the current average pay-out of £1,850.

Whiplash claims, which have leapt by 50% in the last 10 years alone, are thought to cost insurance companies around £1 billion every year – and the number of claims has actually been rising even though the number of road accidents in the UK has fallen.

“For too long some have exploited a rampant compensation culture and seen whiplash claims an easy payday, driving up costs for millions of law-abiding motorists,” said Justice Secretary Liz Truss.

The potential ban/cap is part of several proposed measures which also include: allowing small claims courts to handle personal injury claims up to £5,000 instead of up to £1,000, therefore reducing legal costs; the introduction of a tariff system that would be payable on injuries more significant than whiplash; and medical reports from experts being required before claims could be made.

The proposals have been met with widespread relief by the insurance industry, with LV= among those to promise to pass on 100% of any savings.

LV= promised to pass on all savings from the 2015 Autumn Statement compensation crackdown to customers and that promise still stands,” said Martin Milliner, LV= General Insurance claims director, in a statement issued to Insurance Business.

“We welcome today’s consultation and look forward to working with Government on implementing the reforms – honest motorists and businesses should not have to keep paying the price for unnecessary whiplash claims. The UK is known as the “whiplash capital of the world” so it’s vital that Government implements these proposals without delay to ensure consumers can start getting a fairer deal as soon as possible.”

His words were backed by Aviva, which also reiterated its savings promise.

“This is welcome news for consumers who are rightly fed up with nuisance calls, fraud such as crash for cash, and the huge number of spurious whiplash claims they pay for in their premium,” said Rob Townend, claims director at Aviva, speaking to the BBC.

“These proposals bring us a step closer to saying good riddance to the ‘whip-cash’ merry-go-round that is the bedrock of the UK’s compensation culture.”

However, not everyone welcomed the news without reservation, with Andrew Twambley, spokesperson for the Access 2 Justice campaign, issuing a statement to Insurance Business that ordinary customers may lose while insurers gain.

“Since the proposed reforms were announced in November 2015, it has become clear that the issues are complex,” he said. “Very real concerns have been expressed by a number of organisations that, if these reforms become law, insurers will benefit at the expense of millions of ordinary people who will lose their rights of redress if they have an accident that is not their fault.”

Meanwhile, Donna Scully, partner at Carpenters, also expressed dismay, describing the proposals as potentially “disastrous”.

“It is our view that the Government is embarking on a potentially disastrous course, littered with dangers and potential pitfalls,” she said. “We have consistently pointed out the ‘unintended consequences’ since the reforms were announced in 2015.

“The proposed reforms are short-sighted, unfair and may have the opposite effect. Previous reforms such as LASPO, have demonstrated that ill-considered and predominantly one-sided agendas do not achieve their objectives.

“The focus for reforms should be to tackle fraud. Genuine claimants should not be penalised. So much more can be achieved by an open dialogue and collaboration to find real solutions to tackle fraudulent and other unwelcome behaviour. The reforms are a very blunt instrument that will attack genuine motor insurance customers instead of dealing with those intent on committing fraud.”

What do you make of the reform proposals? Leave a comment below with your thoughts.

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  • Anon 17/11/2016 12:58:44
    Genuine claimants are the rarity. How can it be that people increasingly suffer whiplash as car safety improves, and where accident numbers decline.Newer cars typically include anti-whiplash seating. It's a nod and a wink amongst many that you stick in a claim for whiplash whenever an accident happens and GP reports all too frequently repeat parrot fashion the nonsense that an injury is suffered without any understanding of whether the impact involved in the accident was sufficient to precipitate an injury. Such reports from GPs are themselves just for a part of the compensation gravy train as they provide a prognosis that is no more than a finger in the air but in return for which they shall receive their fat fee for a 5 minute exam and a prepopulated report suggesting physiotherapy that typically does not take place. The whole thing has become a sham.
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  • Tong Lang 17/11/2016 13:52:37
    Interesting that the voices of objection to reform only seem to be from the self-interested professions associated with perpetrating this gravy train. I cannot recall ever hearing a motorist or (premium paying) policyholder raise even a murmur of complaint.
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  • Stuart 17/11/2016 14:53:17
    Unfortunately all of you celebrating the proposals needs to consider exactly how many of your legal rights you are selling for the imaginary £40. If your injured at work due to employer negligence - fracture your wrist and lose £3000 earnings - good luck learning the health and safety at work regulations and paying to pursue your employer for compensation. That's right - that injury is worth around £4000 - well under the £5000 small claims track. You'll be left to fight the employer's solicitor and pay the court fees out of your own pocket - and by the way - the courts fees on that claim would be £455.
    Oh and if you go on holiday and your tour operator put you in a shoddy hotel and you happen to suffer salmonella poisoning - I hope you can brush up on the Travel Package Regulations 1992 and the Sale of Good Act. Oh and all the best finding a food hygiene expert when the holiday company provide their blanket denial - their reports cost in the region of £2000.
    So I'm pleased you will be able to put away that £40 because that's the price not just of reforming whiplash but of withdrawing access to Justice for all types of injury claims.
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