The Issue

The number of RTA (road traffic accident) related soft tissue injury claims (known as ‘whiplash claims’) has increased by 50% since 2006. This is despite the fact that the UK’s roads are among the safest in Europe, improvements in vehicle safety and a decrease in the number of reported road accidents.

A significant reason for this anomaly is the substantial financial incentive to make a whiplash claim (the average pay-out is £1,850). As a result, claimants are much more likely to bring a case for minor injuries or to exaggerate their injuries. The growing compensation culture is made worse by an industry of targeted advertising, encouraging motorists to make claims.

It is estimated that whiplash claims cost the insurance industry around £2 billion per year. Ultimately, this manifests itself in increased insurance premiums for motorists.

Consultation Paper

In order to tackle the number of whiplash claims (and the number of personal injury claims more generally), the government is implementing a new reform programme. This programme is detailed in the November 2016 Consultation Paper on Reforming the Whiplash Claims Process (the “Consultation Paper“), and is expected save the industry approximately £1 billion per year.

The Consultation Paper is aimed at all stakeholders with an interest in the personal injury claims process, particularly those involved in minor RTA related soft tissue claims in England and Wales. Responses are requested by 6 January 2017. A paper summarising the responses to the Consultation Paper will be published in three months’ time.

Aims

It is hoped that the reforms will reduce the costs associated with personal injury claims, and ensure that those with genuine claims receive proportionate compensation. By removing or reducing the availability of compensation for pain suffering and loss of amenity (“PSLA“) the financial incentives to bring claims for minor injury would be decreased. Compensation for other loss, such as the cost of treatment, vehicle damage and loss of earnings will not be affected.

Scope of the Reform Programme

To determine which claims the reforms will affect, the government proposes to use the following definition of RTA related soft tissue injury claims:

“a claim brought by an occupant of a motor vehicle where the physical injury caused is a soft tissue injury and includes claims where there is a minor psychological injury secondary in significance to the physical injury.”

The government is keen to hear the views of respondents on whether the definition above is appropriate.

Measures

The government’s proposals include four measures to tackle the high number and cost of personal injury claims. These are set out in the table here.

Primary legislation will be needed to implement measures (a), (b) and (d). Measure (c) will require changes to the Civil Procedure Rules as well as amendments to Pre-Action Protocols.