Latest on Whiplash Reform in UK Motor Insurance

November 2018
Whiplash Reforms Explained
Hi, it’s Lydia from BogusBonanzas. I’m calling about your recent car accident — our records show that your injuries entitle you to claim for compensation.

Sound familiar? Cold-callers ringing about non-existent accidents score highly on the ‘irritant’ scale, but are part of a pervading problem which has become ingrained into British culture; fraudulent insurance claims. With whiplash topping the ‘false claims’ shortlist, the government announced it was cracking the whip on whiplash in early 2018, to try and curb the number of false claims that besiege the car insurance industry.
What is whiplash?
Whiplash is a medical term for an injury sustained to a person’s neck following a sharp, sudden acceleration-deceleration force which causes the head to snap back and forth, whilst in a seated position. Symptoms can include; neck pain, headaches, fatigue, arm weakness, back pain, but the condition is notorious for its varied and vague range of symptoms.
Why are fraudulent claims an issue?
Whiplash is almost exclusively associated with car accidents, and the vague nature of the symptoms means that fraudsters have viewed whiplash claims as an easy path to a ‘cash for crash’ paydays. Not only do insurance companies shoulder the cost of a claim pay-out, but they also absorb the cost of the associated legal fees — costs which are subsequently passed onto the consumer through higher insurance premiums.

Fraudulent claims are estimated to add at least £1bn a year onto the bills of ordinary motorists, with the UK insurance industry tackling over 1,500 whiplash claims a day.
What are the whiplash reforms?
In March 2018, the Justice Secretary revealed plans to set a cap on the pay outs for whiplash claims, and banning the practice of settling cases without medical proof. Outlined as the Civil Liability Bill, the legislation is set to introduce a new system which fixes the amount of compensation paid to claimants, dependent on their injuries. There are also plans to raise the small claims court limit from £1,000 to £5,000 for whiplash, and £2,000 for other injuries.

Originally earmarked to be introduced in April 2019, the reform has been delayed until April 2020 following an assessment that the new system would need further refinement, and that the industry needs more time to prepare. Although there has been some minor criticism of the reforms, they have been welcomed by insurance companies, who have suggested that customers will benefit from lower premiums as their compensation costs go down.