PI reforms in full – fixed whiplash damages to begin at £225, 1 October 2018 start date

Whiplash: claims do not routinely need a lawyer

The personal injury (PI) industry has 19 months to prepare for the reforms announced by the government today, with the newly published damages tariff showing that those with the most minor injuries arising from a road traffic accident (RTA) – and not just whiplash – will receive just £225 in compensation.

In the detailed response to the whiplash consultation – following this morning’s announcement of the headline changes – the Ministry of Justice (MoJ) said that though the small claims limit could be altered sooner through secondary legislation, it would introduce the reforms as a package on 1 October 2018.

It received 625 responses to the consultation paper, of which 56% were from claimant lawyers.

The MoJ said that though many respondents from the claimant lawyer community argued that the numbers of whiplash claims registered with the Compensation Recovery Unit have been falling, further study of the statistics “suggests this is not the case”.

It said differences in claims labelling “may be behind this belief” – when soft-tissue injury claims labelled as ‘neck’ and ‘back’ are considered together with those labelled as ‘whiplash’, the figure increases significantly.

The number of such claims has remained steady over the last three years at around 680,000, which is around 90% of all RTA related personal injury claims made.

The MoJ said: “There are currently substantial financial incentives for claimants to bring cases regarding relatively minor injury, or to exaggerate the severity of their injury, and Government intervention is required to tackle this issue.”

It has become “culturally acceptable” for claims to be made for very low-level whiplash injuries, it added.

The key decisions announced today are:

  • The reforms will cover RTA-related whiplash claims and minor psychological claims. A definition will be developed to reduce the scope for affected claims to be displaced into other categories of claim.
  • “The government accepts that the definition should not cover more serious psychological illnesses, for example, depression and post-traumatic stress disorder, which are diagnosable using international standards. The government therefore proposes to limit the scope of this measure to minor psychological injuries, such as ‘travel anxiety’ and ‘shock’.”
  • “Following consideration of the arguments put forward by respondents”, the MoJ will not remove compensation for pain, suffering and loss of amenity (PSLA) for minor claims and instead intends to pursue a tariff for claims with an injury duration of between 0 and 24 months.
  • As a result, there is no longer a need to set a definition of what is considered to be a ‘minor’ claim. The tariff will provide two bands for injuries with a duration of up to and including six months.
  • The tariff will cover both whiplash claims and minor psychological claims, rather than having separate amounts as consulted on. The figures can be seen at the end of this story.
  • Judges will have the power to increase or decrease awards by up to 20% in ‘exceptional circumstances’. This will not be defined in primary legislation. “Instead we believe it is more appropriate to leave consideration of when a claim is exceptional to the discretion of the courts.”
  • The small claims limit for RTA-related claims will rise to £5,000, and £2,000 (in line with inflation) for non-RTA PI claims. “We will keep the small claims limit for all PI claims under review and will consider whether a further increase to £5,000 for all PI claims is required in the future.”
  • “The government is of the view that low-value personal injury claims are not so complex as to routinely require a lawyer. Raising the small claims limit to cover PSLA claims of up to £5,000 will not preclude claimants from engaging legal representation, but would mean that they would in future be responsible for paying for their own legal costs if they so choose.”
  • “The government accepts that some claimants may not fully understand the process, but this is mitigated by the significant amount of help and support available to all claimants who act in person.”
  • The MoJ will consider further the suggestions made to help litigants in person, as well as other changes like regulating McKenzie Friends and banning cold-calling.
  • Banning offers to settle without medical evidence in RTA-related whiplash claims only. The ban will include the making, soliciting, accepting and receiving of such an offer. There will be no exemptions to the ban and it will be a regulatory ban enforced through the relevant regulators as identified in the legislation.

The MoJ’s response to the other issues raised in the consultation paper, such as rehabilitation and credit hire, will be issued “in due course”.

A final version of the impact assessment will also be published shortly and will contain a revised estimate of the expected savings in light of evidence received through the consultation process.

“The government fully expects these savings to be passed on by insurers to consumers and we will be monitoring the impact of these reforms on the cost of motor insurance,” the MoJ said.


    Readers Comments

  • Mark says:

    What the insurers are aware of is that many LIp’s when currently choose to be one, are extremely time consuming to deal with a a lay person. Self represented claims are only set to increase and as a result this will require a lite intervention/guidance service such as InterRisk Solutions to navigate them through the process.

  • Steve says:

    I notice you don’t say that your a director of InterRisk Mark

  • Simon says:

    Was it the Government who had to tackle this or their paymasters the Insurance industry

  • michael says:

    What shall I do with my £40, oh wait, its gone to the shareholders of the Insurers. Never mind.

  • shabz says:

    do they have any idea how many ppl would lose there jobs

  • Richard says:

    Thousands of job will disappear and the insurers most certainly will not pass on savings. Insurers are, to be frank, full of rubbish, in terms of the pricing for their policies.

  • Eliza says:

    how come this completely contradicts the news headlines about car insurance premiums increasing to cover increased payouts?

  • Christopher says:

    Having worked within the industry as a litigator (for both claimants and defendants), it is only fair to say that both claimants and those that represent / encourage such claims, have had it far too good for far too long. A very large percentage of claims are opportunistic at best and, where some are genuine; they is generally an element of exaggeration in any event. Such reforms are sensible and will not preclude genuine claimants from claiming. Criticism and comments to discredit such reforms will only be voiced by those that have a vested interest (claimant law firms / referral outfits). No doubt these firms will already be considering their next venture in to encouraging claims and exploiting insurance policies; watch the interest in holiday sickness claims accelerate within the next year or so.

  • Guru says:

    It is gratifying to see that finally things have begun to grind into motion for the better. From an insurers perspective, such things like whiplash are farmed to oblivion and back due to the inherant difficulty in proving (or disproving) such injuries are indeed genuine.
    So many AM companies and certain unamed solicitors are all too keen to jump on the whiplash bandwagon and indeed coerce fraudulent claims. Don’t get me wrong. With genuine claims for injury then payout for physiotherapy, LOE or if said injury has caused financial loss then payout is justifiable. As Christopher has said ‘they have had it good for too long’

  • mark bradley says:

    Whilst many may have mild symptoms of whiplash, and in some cases no physical injuires, many do have extensive psychological injuries that affect many aspects of a persons life. An additional £45 added to their claim is immoral and unjust

  • Sam says:

    So whilst the comps has been readjusted, what about the people who are injured and hurt and suffer nightmares because of someone else’s stupidity and causing their vehicle to be written off? The driver who hit me at speed caused pain to my neck and shoulder and anxiety about driving

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