Car insurance premiums are to fall by £35 a year after the government announced measures to curb the high number of whiplash claims that currently cost UK drivers over £1bn a year.
The justice secretary, David Gauke, unveiled plans to introduce the civil liability bill through the House of Lords which set out changes to the way that whiplash claims are calculated and paid.
Road traffic accident-related injury claims are 50% higher than a decade ago, despite the fall in the number of reported accidents and the fact the UK has some of the safest roads in Europe, he said.
Part of this rise has been fuelled by a “predatory” claims industry that has encouraged exaggerated and fraudulent claims, driving up the costs of insurance premiums for ordinary motorists.
David Gauke said: “We are putting this right through this important legislation, ensuring whiplash claims are no longer an easy payday. The bill will seek to set fixed amounts of compensation for whiplash claims and the halt the practice of settling whiplash claims without medical evidence.”
Ministers have also proposed changes to the way the personal injury payouts are calculated following serious injuries – the so-called Ogden rate. Insurers have long-campaigned for reforms in this area and in return have pledged to pass on the savings in full.
Huw Evans, who runs the Association of British Insurers (ABI), warned people and businesses were paying more for their motor insurance than ever before.
“We need changes to the law to tackle some of the root causes. Soft tissue injury claims have been rising year on year since 2014 as cold-calling claims firms have thrived, driving up the cost of insurance. This bill will ensure people in England and Wales receive fair compensation while reducing excess costs in the system,” he said.
Rob Townend, of Aviva UK General Insurance, said the reforms were “badly needed to cut cost pressures on drivers”. He claimed the UK’s compensation culture was costing honest motorists £5m a day.
Comparethemarket.com said the reform would be welcome news to Britain’s cash-strapped drivers, whoseaverage premiums rose by £70 between February and November last year. In January, the ABI said average premiums were £481, up 9% on the previous year.