The Justice Committee has launched an inquiry into how whiplash injuries resulting from traffic accidents are processed following reforms in the legal framework introduced by the government. 

The committee said the whiplash reform was introduced in 2021 as insurance claims for the injury were running at over £2bn per year – adding an average of £90 to everyone’s car insurance policies. 

The Whiplash Reform Programme, which formed part of the Civil Liability Act 2018, was aimed at roughly halving the overall cost of these claims, and then passing on savings in premiums of between £40 and £50 a year per motorist.

As part of the programme, the Ministry of Justice asked the insurance industry to set up an online claiming portal, known as the Official Injury Claim Service, which would deal with whiplash and claims for bruising or minor fractures.

The committee wants to investigate the effects of the reform programme, including any savings, and how the claim service portal operates. 

To do so, the committee is inviting evidence until 5pm on 17 March. 

In response to the inquiry, a spokesperson for the Association of British Insurers said: “The ABI supported the whiplash reforms, that aim to ensure proportionate compensation for whiplash, while reducing excessive legal costs that end up being paid for by all motorists through their motor insurance premiums. We will be feeding in our response to the Justice Committee.”

 

The spokesperson added the build of the OIC portal "was a huge undertaking" and insurers and claimant representatives have spent time, effort and money to make the new system work. 

"Where there are any areas for improvement, we are committed to working with the OIC, the Ministry of Justice, insurers, claimant representatives and others to help to deliver those. It is also positive that claimants have demonstrably been able to use the OIC portal to make whiplash claims without legal representation – hardly any claimants did this under the old system.”

Whiplash injuries are now to be dealt with under a fixed tariff scheme established under the Civil Liability Act 2018 and related regulations. However, there is no guidance in assessing damages where a claimant has suffered whiplash injuries in combination with other injuries.

Eighteen months after the reforms were introduced, the Court of Appeal was asked to provide guidance on the so-called mixed injury claims - claims for a combination of injuries, at least one of which falls under the Whiplash Injury Regulations 2021 and one which does not.  

The Court issued judgment on the first two cases on mixed injury claims on 20 January - Rabbot v Hassam and Briggs v Laditan – and ruled that the award for non-tariff injuries (injuries to which the Act does not apply) should be assessed using common law principles rather any kind of set costs.

Allianz was not impressed with the ruling. From a commercial lines’ perspective, Nick Kelsall, head of motor claims at Allianz Commercial, said when the whiplash reforms were introduced, limits were set to compensate claimants for genuine injuries, with the aim to deter fraudulent or exaggerated claims. 

Kelsall added: “However, our data shows that since whiplash compensation has been capped, we’ve received more claims for mixed injuries, which would suggest that some are gaming the system to inflate their payout.”

For personal lines, the judgement is described as “a hammer blow to hard pressed motorists” by Martin Milliner, general insurance claims director at LV, also part of Allianz Group. 

He said: “The ruling will undermine the intention of the whiplash reforms that were designed to pass back millions of pounds in lower premiums as a result of reduced volumes and costs of whiplash claims. Britain could now become the bruises and sprains capital of the world.”

According to Clyde & Co, the court’s ruling could push up claim costs for motor injuries.

Mark Hemsted, partner at the law firm, said non-tariff injuries such as arm and knee injuries “have become more valuable”.

He said: “This judgement creates the risk that the movement towards using additional injuries to bring claims will increase value and frequency to the extent that it will thwart the primary intention to reduce claim value.”