Bogus whiplash claims add £1billion to car insurance bills every year
Motorists could see car insurance bills cut by around £40 a year as a result of the clampdown
PLANS to crackdown on bogus whiplash claims which push up insurance bills for honest motorists have been outlined by the government.
A cap could be placed on the amount that people can claim for whiplash from insurers - or the right to compensation could be scrapped entirely.
The proposals would cut the high number of whiplash claims, allowing insurers to lower their premiums, the Ministry of Justice (MoJ) said.
Big insurance firms, including Aviva and LV=, have promised to pass on savings to drivers - worth a total of £1billion.
It said insurers have pledged to pass on savings to drivers - worth a total of £1 billion.
A motorist could see their car insurance cut by around £40 a year as a result of the clampdown, according to the MoJ.
Whiplash claims are 50 per cent higher than they were a decade ago, with the epidemic being fuelled by a predatory claims industry that encourages minor, exaggerated and fraudulent claims, it said.
The government is set to ask insurers about its plans and the consultation will run until the beginning of January next year.
Capping compensation would see the average payout cut from £1,850 to a maximum amount of £425. Compensation would only be paid out if a medical report was provided as proof of injury.
One whiplash claim is paid out every 60 seconds and it is unacceptable that responsible motorists have to pick up the tab
Economic Secretary Simon Kirby
Other measures include introducing a transparent tariff system of compensation payments for claims with more significant injuries, raising the limit for cases in the small claims court for all personal
injury claims from £1,000 to £5,000 and banning offers to settle claims without medical evidence.
All claims would need a report from a MedCo accredited medical expert before any payout.
Justice Secretary Elizabeth Truss said: "For too long, some have exploited a rampant compensation culture and seen whiplash claims an easy payday, driving up costs for millions of law-abiding motorists.
"These reforms will crack down on minor, exaggerated and fraudulent claims."
RELATED STORIES
Economic Secretary Simon Kirby said: "One whiplash claim is paid out every 60 seconds and it is unacceptable that responsible motorists have to pick up the tab."
Insurers, who have been pressing for further action on bogus or exaggerated whiplash claims, welcomed the proposals.
How much could the clampdown change insurance costs
Someone shopping around for comprehensive annual cover can now expect to pay £585.84, according to the AA's recent British Insurance Premium Index.
The cost has surged by 16.3 per cent over the past year, adding nearly £82 to a typical motor policy.
The AA said whiplash claims and hikes to insurance premium tax had pushed up the cost of insurance.
The government claims that the clampdown could knock around £40 a year off bills for drivers.
James Dalton, director of general insurance policy at the Association of British Insurers (ABI) said:
"Introducing a range of measures, such as limiting the compensation payable for these injuries, will help create a more honest system that doesn't reward those who want to exploit it.
"If implemented, these reforms will ease some of the pressure recent increases in insurance premium tax and repair costs are already putting on premiums.
"We will need to study proposals carefully and look forward to participating in this consultation, and the debate about how we can ensure fair compensation for genuine claimants and a fairer deal for motorists."
For too long, some have exploited a rampant compensation culture and seen whiplash claims an easy payday...
Justice Secretary Elizabeth Truss
Rob Townend, claims director at Aviva, said: "This is welcome news for consumers who are rightly fed up with nuisance calls, fraud such as crash for cash and the huge number of spurious whiplash claims they pay for in their premium.
"These proposals bring us a step closer to saying good riddance to the 'whip-cash' merry-go-round that is the bedrock of the UK's compensation culture."
Insurance firm LV= said 10 per cent of its claims handlers were employed just to tackle fraudulent claims. Around 80 per cent of personal injury claims it received related to whiplash.
Martin Milliner, general insurance claims director at LV= said: "The UK is known as the 'whiplash capital of the world' so it's vital that government implements these proposals without delay to ensure consumers can start getting a fairer deal as soon as possible."
We pay for your stories! Do you have a story for The Sun Online news team? Email us at [email protected] or call 0207 782 4368