Whiplash reforms cut premiums £31 in three years
A new report from HM Treasury has concluded that motorists have saved £31 in premiums in the three years since the whiplash reforms were introduced.
This is below the £35 a year the Ministry of Justice predicted they would cut insurance costs.
The reforms were introduced to tackle fraud around personal injury claims following a road traffic accident. They included the introduction of an online portal for drivers to handle claims and abolished the recoverability of legal costs for claims less than £5,000.
The report revealed that average premiums were £4 lower in 2020/21 than they would have been without the reforms, £12 lower in 2021/22, and £15 lower in 2022/23. Meanwhile, total gross written premiums was £11.8bn in 2022/23, which would have been £12.3bn but for the legislation.
The Treasury said:
“The information provided by insurers shows that individuals who are policyholders benefitted from the reductions in costs for insurers through paying lower premiums over the reporting period of 2020 to 2023 than would otherwise have been the case if the act didn’t exist.”
Repair costs
However, the Association of Personal Injury Lawyers (APIL) has said that insurance prices have not reflected the savings insurers have enjoyed through falling claims numbers.
Jonathan Scarsbrook, immediate past president of the Association of Personal Injury Lawyers (APIL), said: “There has been a 71% increase in motor insurance premiums since the reforms were introduced, despite an 11% decrease in the cost of injury claims settled by car insurers.
“The evidence has always pointed to repair costs being behind rising premium prices. It’s time the government focussed on these costs and the cost of hire vehicles rather than removing the right to full compensation for physical and psychological harm.
“Slashing compensation for painful, avoidable whiplash injuries to a fraction of their actual value made a mockery of compulsory insurance, which is designed to compensate people properly for avoidable injuries.
“This is a lose-lose situation for consumers and they should be furious. They are spending more than ever for compulsory insurance on the understanding that they will be looked after if anything goes wrong. While vehicle damage can be inconvenient and worrying, bodily harm is the worst possible thing that can happen to someone.”
