The Ministry of Justice has confirmed there are to be fixed tariffs capping whiplash compensation payouts.
As part of the Prisons and Courts Bill, the MoJ also announced a ban on claims without medical evidence, saying that it expects this to cut car insurance premiums by around £40 a year.
The MoJ said it intends to raise the small claims track from £1000 to £5000 for road traffic accident related injuries. It will raise the small claims track for all other personal injury claims to £2000, in line with inflation.
Justice Minister Sir Oliver Heald said: "We are determined to get a grip on the widespread compensation culture that unfairly impacts millions of motorists through higher premiums.
"So we are cracking down on minor, exaggerated and fraudulent whiplash claims. And we expect insurers to fulfil their promise and put the money saved back in the pockets of the country's drivers. This should mean about £40 per motorist."
The announcement follows the government's consultation on personal injury reform, which closed on 6 January.
The government said a total of 625 responses to the consultation paper were received. Of these, 56% of responses were from claimant lawyers, 7% were from campaign groups, 7% were from credit hire companies, 6% were from private individuals, and 5% were from insurers.
The remainder included claims management companies, defendant lawyers, the judiciary, medical experts, trade unions and transport/travel organisations.
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."
Qamar Anwar, managing director of First 4 Lawyers, said: "In rushing through its response to the personal injury reforms, it is clear that the government and insurance sector value the damage caused to vehicles more than they do to humans.
"It is clear that the consultation, which only closed on 6 January, simply paid lip service to a decision that was already made by the government in cahoots with the insurers behind closed doors. We are shocked at the government's lack of concern for innocent victims of road traffic accidents."
Andrew Twambley, spokesman for Access to Justice said: "We are extremely disappointed that the government seems hell bent on removing the rights of ordinary people to gain redress for injuries that weren't their fault.
"The government has not even waited to issue a response to the consultation exercise, confirming that it is uninterested in due process and deaf to the serious concerns raised by legal firms, the judiciary and consumer groups.
"Insurers will be rubbing their hands in glee. They have the government in their pocket, and will themselves be pocketing any savings made, for themselves and their shareholders."
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