Earlier this month the UK government published a bill which is part of a package of reforms ministers say will see the cost of car insurance claims decrease. It is said that this will also result in savings of £35 for customers.

Car crash

The new rules will change the process of making a whiplash claim, which insurance companies have been complaining about for a while. Insurers are unhappy about the cost of whiplash claims, many of which they claim are fraudulent and have partly blamed for rising insurance premiums in recent years. According to confused.com, at the end of 2017 the average premium price was a steep £827.

The government are also changing the mechanism by which the discount rate is set. The discount rate applies to compensation paid out by insurers to people who have suffered life-changing injuries. The discount rate will be reviewed by an independent expert panel once every three years.

According to director general of the Association of British Insurers, Huw Evans, the new rules

“will ensure people in England and Wales receive fair compensation while reducing the excess cost in the system”. New whiplash regulations were also backed by Justice Secretary David Gauke who said they will save motorists around £35 a year. He went on to say the new calculations for personal injury claims will bring “certainty and transparency to the system, and savings for the NHS”.

However, it has not been universally accepted as a benefit to motorists. The president of the Association of Personal Injury Lawyers, Brett Dixon said the new rules would mean

“people with catastrophic injury claims will almost certainly return to a situation where their compensation will not meet their needs.”

Access to Justice (A2J) which opposes the whiplash reforms, points to official figures showing the both number and cost of whiplash claims are declining sharply, and that insurers will hold on to the savings (estimated by A2J at between £16-18) and give it to their shareholders rather than motorists.

The lobby group says insurers reported big profits last year, thanks to the high cost of car insurance. All the major insurers announced large increases in their dividend payouts as a result.

In late 2016, it was proposed by the Ministry of Justice that the right to compensation for minor whiplash injuries was scrapped, or there should be a cap on the amount people were allowed to claim. The suggestion was that capping compensation would see a sharp decrease of the average payout from £1,850 to a maximum of £425. Furthermore, this compensation would only be paid to victims who had a medical report providing proof of the injury.

Rob Townend of Aviva UK General Insurance was in favour of the new regulations claiming that motorists are currently paying £5m per day at the hands of the UK’s current culture of compensation.

The ABI said in January that the average cost of premiums had risen 9% on the previous year and it was the youngest and oldest drivers who were being hit the hardest with the premium increases.

So do you think the new regulations are a good thing or will they let people down in their time of need? Let us know on any of our social media channels.

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