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Whiplash: it's time for meaningful reform

James_Dalton_blog The release today of the Transport Select Committee’s report on whiplash reflects how finely balanced views are on whiplash reform.

As I highlighted in my June blog after giving evidence to the Committee, the case in favour of meaningful reform of the whiplash claims process is overwhelming. Politicians recognise that, but today’s report shows how nervous they are about making the tough calls for change to help insurers combat the whiplash epidemic and deliver further premium reductions for hard-pressed motorists.

The Committee’s report rightly highlighted the need to improve the quality and timeliness of evidence used in whiplash claims and the importance of an accreditation framework for doctors preparing medical reports. Most people agree with that, so no difficulty there. The report also asks whether a three-year limitation period to bring a whiplash claim remains appropriate and whether requiring whiplash claimants to provide more information in support of their claim is correct. Interesting questions. But what is needed is action, not further delay to facilitate more debate and discussion.

Delivering for consumers

Consumers have long demanded cheaper car insurance premiums. But once again, the Select Committee has missed the opportunity to grasp the nettle and recommend what’s needed to deliver what consumers really want.

The Committee noted that the small claims track limit was set at £1000 in 1991 when 50% of personal injury claims fell within it. So it’s surprising that now is not the right time to increase it, when only 9% of claims fall under that limit. The Ministry of Justice has consulted on increasing the limit to £5000 but the Committee thought access to justice would be affected and that it might prove counter-productive in combating fraud. This is the Committee simply kicking into the long grass making the recommendations for change that are vitally needed. All the more galling for premium payers, given that doing so little simply allows personal injury lawyers to continue to pocket legal fees which are completely unnecessary in most low-value personal injury claims under the proposals we have advanced.

Insurers have long-argued that tinkering at the margins is not good enough. We need radical reform of the whole compensation system. We also accept that the insurance industry has been part of the problem, which is why we have been at the forefront in making the case for change. We argued strongly that the private car insurance market should be referred to the Competition Commission so that it can undertake a proper investigation of the markets for replacement vehicles and car repair.

And, supported by politicians across the political spectrum, the insurance industry was instrumental in making the case for the removal of money-go-round referral fees from personal injury claims rather than making them more ‘transparent’ as argued by the Transport Select Committee at the time. So, although there is more to do, we are getting our own house in order.

Premiums falling

And we are delivering on our commitments. Last weekend, in the newspapers and across our television screens, we saw that car insurance premiums are coming down. The AA’s British Insurance Premium index showed that the average “shoparound” quote reduced by 3% over the last 3 months and 9.8% over the past year. Further evidence of the industry delivering on its commitment can be found in the latest Confused.com/Towers Watson Car Insurance Price Index which showed that the average premiums for comprehensive cover fell by 7.9% in the second quarter of 2013 and 14.9% over the last 12 months.

We don’t need the Government to monitor whether insurers are delivering on our commitments – the court of public opinion is more than effective at doing that already. These premium reductions show what can be delivered if meaningful changes are made. And there is little doubt that with further reform, premiums will reduce further.

Next steps

So all eyes now turn to the Ministry of Justice. Having decided to wait for the Select Committee’s report before responding to their consultation, the question is: do they take the Committee’s advice or do they take the really difficult decisions and deliver the meaningful reform that will have a real impact?

We will see later this year. Ministers recognise that it is unacceptable for £90 to be added to the average car insurance premium to pay for whiplash claims. And they recognise that only fundamental change to the current system will address the problem. The ball is now in Ministers’ court to make a decision on how to proceed on whiplash reform when views are so finely balanced.

Last updated 29/06/2016