Whiplash: What next?

Whiplash has been heavily debated in recent years and rightly so. With whiplash claims now costing UK motorists over £2bn a year, adding £90 to the average car insurance premium, it is no surprise that public and political interest in the issue is at an all-time high and that there is now consensus that action is required to tackle the UK's compensation culture.

Given reform is urgently required, the TSC was right to identify the need to tighten up the medical requirements for those submitting whiplash claims. The increasing number of frivolous or exaggerated whiplash claims insurers have seen is facilitated by the current medico-legal reporting system, which has only added to the problem rather than being part of the solution.

The TSC also recognised the current three year limitation period makes it close to impossible for insurers to effectively combat frivolous whiplash claims. After all, how is an insurer supposed to disprove someone sustained a whiplash injury up to three years after it is alleged to have happened?

There is no escaping the fact however, that the TSC's report has attempted to kick into the long grass some of the reforms insurers need to help them combat the whiplash epidemic and deliver further premium reductions for hard-pressed motorists.

The TSC missed the opportunity to make a recommendation for change that really matters when it failed to support the government's proposal to increase the small claims track limit to £5 000. This is not the end of the story, however.

There is little doubt about the positive impact reform to the civil litigation system can bring. The industry made a public commitment at the Downing Street insurance summit last year to pass on cost savings to consumers resulting from the recent civil litigation reforms. And insurers are delivering on their commitment.

Just the other week, we saw further evidence that car insurance premiums have fallen. The AA's British Insurance Premium index showed that the average "shoparound" quote reduced by 3% over the last 3 months and by just under 10% over the past year.

So what next for whiplash? Insurers have long-argued that tinkering at the margins is not good enough and that real meaningful reform is needed to combat the increasing number of spurious whiplash claims.

Now the committee has concluded its inquiry, the focus moves to the government as the Ministry of Justice considers its next steps following the end of its consultation.

And let's be clear, this is ultimately a decision for the government to take, not the TSC, and we know that the government hasn't been afraid to make tough calls in the past. There appears to be little doubt that reform is on the way for the medico-legal reporting system but the question remains what will happen to the SCT limit?

The government has clearly seen the industry has delivered on its commitment to pass on savings and reduce premiums and it understands further reform can help lead to further reductions. The question is whether it has the appetite to introduce the necessary reforms to really help the industry to tackle fraudulent and exaggerated whiplash claims, which will help to further reduce premiums for insurers' customers.

Given the government wants the UK to lose the unwanted title of the ‘whiplash capital of Europe', has publicly committed to work with the industry to tackle the compensation culture and has seen positive results from the industry so far, I am hopeful that ministers recognise the need for real, meaningful reform.

Rob Cummings
Motor policy adviser, Association of British Insurers