The Ministry of Justice has announced that it is seeking to reduce the “unacceptably high” number of whiplash claims. It has launched a consultation which proposes to:

  • Cap the compensation for whiplash at £425.
  • Pay compensation for whiplash only where a medical report was provided as proof of injury.
  • Raise the limit for cases in the small claims court for all personal injury claims to £5,000.
  • Ban offers being made to settle claims without medical evidence.

As we have previously reported1, these reforms have already been proposed and then withdrawn in the past year, with both the proposal of the reforms and their withdrawal provoking strong responses from stakeholders.

The publication of the Ministry of Justice’s consultation paper has been welcomed by the Association of British Insurers and Aviva, which respectively commended the proposals as helping to “create a more honest system that doesn’t reward those who want to exploit it” and “necessary and courageous”. Aviva also pledged to pass on to its customers “100% of the savings” which result from the reforms.

By way of contrast, the Motor Accident Solicitors Society stated that the proposals would have “negative unintended consequences” and would “fall straight into the hands of those who would exploit claimants”, while the Association of Personal Injury Lawyers criticised the proposals as “heavy handed and excessive”.

If other insurers join Aviva and pledge to pass on any savings from the reforms to their customers, we suspect that public opinion will favour reform. However, the anti-reform group may be able to sway sentiment in their favour by persuading the government to focus instead on finding a solution to what the Association of Personal Injury Lawyers called the “scourge of cold calling” by claims management companies.

Either way, with these proposals giving rise to strong feelings on each side of the debate, it looks like there are more twists and turns ahead.