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Personal Injury: Compensation

Question for Ministry of Justice

UIN HL7648, tabled on 8 May 2018

To ask Her Majesty's Government what independent evidence there is that the Civil Liability Bill will meet their objective of reducing the average cost of a motor insurance policy by £35.

Answered on

22 May 2018

The MoJ’s impact assessment on the whiplash reforms sets out the analysis the Government has used to estimate the £35 savings for insurance premiums. The impact assessment was informed by DWP’s Compensation Recovery Unit (CRU) data on the overall volume of claims and data from across the industry with more detailed information on these claims which shows estimated savings of £1.3bn to insurers. Assuming 85% is passed on to consumers, this translates, on average, to a £35 reduction per policy. Link to the impact assessment can be found here: https://publications.parliament.uk/pa/bills/lbill/2017-2019/0090/whiplash-IA.pdf.

Data from the Department of Work and Pensions shows that there were around 650,000 road traffic accident-related personal injury claims made in 2017/18, a rise of nearly 200,000 or 40% on the figure in 2005/06. Department of Transport figures show that in the decade to 2016/17, reported road traffic accidents went down from around 190,000 to 135,000, a fall of 30%.

The Government does not collate fraud data, as the nature of fraud makes it difficult to accurately identify the number of unmeritorious claims, meaning that not all fraud is detected. In 2016, however, the insurance industry identified around 69,000 cases of motor insurance claims which they considered to be fraudulent, worth £780m.

The Government’s whiplash reform programme is about more than dealing with fraudulent and exaggerated claims, as the cost to all motorists from the high number and cost of these claims is too high. The Government’s reforms will reduce the incentives for making unmeritorious claims, and encourage defendants to rightly challenge claims they believe to be fraudulent or exaggerated, but without disadvantaging genuine claimants.

The information related to the cost of insurers contesting whiplash claims is commercially sensitive and as such cannot be published.