Whiplash reforms: legislating for insurers’ empty promises?

The Ministry of Justice’s whiplash reforms are proceeding briskly, after a minor derailing due to Covid-19, and the next set are due to be implemented in May 2021.

Has your insurance premium been reduced by £35?

Despite many years’ worth of reforms relating to the UK’s so-called whiplash culture already, consumers have yet to see any sign of a promised reduction in motor premiums from the insurance industry. An average saving of £35 was anticipated – have you noticed this yet? Has anyone?

Despite what some people may say or believe, claimant lawyers have always been at the forefront of efforts to stamp out fraudulent personal injury claims. This is particularly the case with those stemming from road traffic accidents.

Although evidence of an ongoing, so-called whiplash claims epidemic is tenuous to say the least, with motor claims (and indeed Employers Liability and Public Liability claims) reducing year on year since the Ministry of Justice’s online Claims Portal came into force, the MOJ has continued with its wide-reaching reforms. The next chapter of these reforms to motor claims, due in May 2021, is perhaps one of the most significant since they were first introduced.

Are motor claims really still rising?

We are led to believe that claims are spiralling out of control, yet the Government’s own yearly data from its Compensation Recovery Unit continues to support that claims are in fact falling, rather than rising. In 2020 their data indicates around a 46% drop in motor claims alone. Of course, it may be that some of this drop was due to Covid-19 restrictions last year with less people on the roads, but, as I’m sure many of us can attest to, whilst traffic may have reduced in the first lockdown, since then volumes have crept back to pretty-much-normal levels.

The insurance industry’s sweetener – to reduce premiums

The insurance industry has been the main instigator behind these reforms, and one of their key promises from the outset was that, by bringing the reforms in, and in particular slashing costs payable to Claimant solicitors, insurers would be able to pass on their savings to customers by way of reduced motor premiums (on average, a £35 reduction was anticipated). Regrettably, this promise has failed to become reality.

As most of us will probably agree, motor premiums continue to be on the rise (although if you are working from home at the moment due to Covid-19, and are lucky enough to be with the right insurer, you may be eligible for a minor reduction, but that of course has nothing to do with the whiplash reforms).

Why isn’t this promise being honoured?

No-one disputes that the insurance industry faces costly challenges at times, not least the current pandemic but also events like the devastating flooding of homes and businesses we’ve seen over the last few years, however no justification has been given as to why – at the time of writing – no whiplash reform savings have been passed on to customers.

The industry profits significantly off motorists, and should be held to account if they fail to meet promises they themselves hold out as key benefits to justify sweeping reforms. Not doing so flies in the face of their customers’ faith and loyalty.

These reforms have been in place and seeing results for long enough, and the cynics amongst us could argue that by keeping motor premiums high, and failing to pass on savings, the insurance industry is still trying to throw all that is supposedly wrong in the world of personal injury claims back at the door of claimant lawyers.

Looking ahead to May 2021 – Litigants in Person and what this means for claimants

Come May 2021, motorists who want to claim compensation following suffering less serious soft tissue injuries in a road accident (which actually means any motorist with a whiplash-type injury and loss claim valued at up to £10,000) will have to act as a Litigant in Person – i.e. represent themselves. Conversely, they will be up against the might (and bottomless pockets) of the insurance industry who can employ the best lawyers and barristers. Many claimants may not want to go down that route at all, or may start off well but face disputes to their claims by insurers that they simply don’t have the legal knowledge or means to challenge. This could leave injured people without the compensation they need to get on with their lives, or settling their case prematurely, and when they don’t have a clear prognosis this could impact on their future; claims cannot be re-opened once settlement is agreed.

The insurance industry are keen to show how approachable they can be to Litigants in Person, to offer them a direct and straightforward service, and compensate them fairly after a road accident. In failing to honour their pledge to give back even a fraction of the savings made since the whiplash reforms came in though, how much can we trust their assurances that they will do all they can to assist Litigants in Person step-by-step through the claims process and then compensate them properly at the end? In most cases, a claimant solicitor will no longer be on-hand to ensure that happens.

Once these new reforms are made law in May, there will as a direct consequence be additional savings for the insurance industry.

We rely on insurance companies, often when we are at our lowest. Let’s hope we start to see the promised savings on motor premiums passed on to consumers soon.