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Government to reform whiplash insurance claims with pay-out cap

Government to reform whiplash insurance claims with pay-out cap

The government has announced a series of measures to reform whiplash injury insurance claims triggered by road traffic collisions.  

The measures, which has been welcomed by the insurance industry, were announced by the 
Ministry of Justice in publishing part one of its response to the ‘Reforming the Soft Tissue Injury (‘Whiplash’) Claims Process’ consultation which closed earlier this year.  

Ministers have considered and made a number of policy decisions, including:
The introduction of a tariff of fixed compensation for pain, suffering and loss of amenity for claims with an injury duration of between 0 and 24 months
Providing the judiciary with the facility to both decrease the amount awarded under the tariff in cases where there may be contributory negligence or to increase the award (with increases capped at no more than 20%) in exceptional circumstances;         
Introducing a ban on both the offering and requesting of offers to settle claims without medical evidence

Increasing the small claims limit for road traffic collision-related personal injury claims to £5,000; and          
Increasing the small claims limit for all other types of personal injury claim to £2,000.

The first and third measures above will be introduced through provisions in the Prisons and Courts Bill. Measures four and five will be introduced through secondary legislative procedures. The government intends to implement the reforms as a package. Part two of the government response will be published in due course.  

Commenting on the government’s Prisons and Courts Bill, which includes plans to cap whiplash compensation pay-outs and raise the small claims limit for road traffic accident claims, James Dalton, director of general insurance policy, Association of British Insurers, said: “The reforms to whiplash claims set out in the Bill cannot come soon enough.

“For far too long claimant lawyers have been defending a system riddled with exaggerated and fraudulent claims because they have been profiting handsomely from it. The gravy train must stop.  

“Motorists know that the UK’s roads have been getting ever safer, so why have whiplash-style claims been rising? People want an insurance claims system that provides compensation and support to those who genuinely need it. What they don’t want is to be plagued by spam calls and texts from ambulance chasers, whilst personal injury lawyers continue to profit from a broken system in urgent need of reform.”