The impact of the 2021 Whiplash reforms

On the 31st of May 2021 the UK government made changes to the claims process for low value road traffic accident-related personal injury claims, the majority of which are ‘whiplash claims’. The reforms apply to injury claims arising from a road traffic accident (RTA) that are valued at less that £5,000. 

These measures mean that if you suffer any injury in an RTA that wasn’t your fault and the value of the claim is less than £5000, you will not be able to recover legal costs from the insurers of the person or institution, responsible for the accident.

So, why did the government introduce these reforms?

You may have seen adverts on TV and radio, or maybe you even received nuisance calls from solicitors asking if you have been involved in an accident that wasn’t your fault. This was because before the reforms came into play, Solicitors could claim their legal expenses and profit from presenting whiplash claims to insurers.

ABI (Association of British Insurers) data showed that between 2006 and 2016, the number of RTA injury claims increased by 50%, despite a fall in reported accidents and improvements in the safety of modern vehicles, the ABI still saw that whiplash related claims were still accounting for around 85% of all road traffic accident claims.

In 2019 approximately 1,500 whiplash claims were made per day in the UK. This was costing the insurance industry £2bn a year – adding an average of £90 to annual motor insurance premiums for customers. The ABI spent years campaigning for reforms and had a large part to play in working collaboratively with the government to push for these reforms.

They key aspects of the reforms were to:

  • provide a tariff of payments for some aspects of whiplash compensation, 
  • to introduce a computerised portal system that would simplify use for injured parties 
  • to present their own whiplash claims, ensuring legal advice is only paid for an RTA injury claims over £5000
  • introduce a ban on seeking or offering to settle whiplash claims without medical evidence of the injury.

It's been nearly 2 years since the reforms where introduced, so what impacts has this had on the insurance industry and what common trends are we seeing?

The anticipated cost saving to consumers was calculated at £35 a year by the government, data is still patchy, and we await richer data to be able to fully quantify the cost benefit it’s had.

We have seen a reduction in the overall costs of insurance premiums despite the cost of inflation. The average inflation cost for the motor industry across paint, materials and parts is 11%, the cost of insurance premiums has dropped by 5% on average. Some would argue that this is a win for the whiplash reforms, and they are having a positive impact on pricing.

In terms of trends being seen in the industry, Insurers are reporting that in some cases Solicitors are finding loop holes in the new reforms to work to their benefit. The whiplash reforms encourage injured people with low value whiplash to represent themselves – negating the need for a Solicitor; however, if the injured person has another condition on top of their whiplash, they can sort the help of a Solicitor. 

What insurers are seeing now is a sharp spike in the number of injury claims where the person is claiming whiplash and another condition such as tinnitus- thus securing the Solicitors income revenue. Certain conditions such as tinnitus are difficult to prove or disprove and a well versed Solicitor will be aware of this.

In January 2023 it was reported that the ABI and the insurance industry were concerned at the rising number of whiplash claims they were receiving with hybrid injuries that combine whiplash and non-whiplash injuries. It was taken to the court of appeals in October 2022 and it was ruled that personal injury claimants can recover damages for both whiplash and non-whiplash injuries without them cancelling one another out.

This was not the outcome the ABI and insurers were looking for, a request to appeal the decision is being taken to the supreme court for review. The concern here is that this ruling could potentially ‘open the door’ to double counting of injuries which would increase the amount paid out for these injuries in the form of compensation.

The outcome could be that insurers have to again increase their premium prices to mitigate an increase in costs for injury claims, it could also undermine the purpose of the whiplash reforms. 

So, it seems that at this early stage it’s difficult to say if the whiplash reforms are working or not, more time and data is needed to fully quantify the impacts. The industry also awaits the response from the supreme courts on the recent rulings.

Solicitors and insurers will both be working hard to ensure they protect their own interests, and the game of cat and mouse is far from over.

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