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Whiplash: the road ahead in 2014

Rob Cummings blogOne of the benefits of Christmas, apart from plenty of turkey, mince pies and special episodes of EastEnders, is that it is a time to reflect on the year just gone.

And looking back on 2013, there is no doubt that it has been a year of significant change in the motor insurance market, with the cost of car insurance a hot topic in the corridors of Westminster and Whitehall, and in the media.

April saw the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO), which brought with it much needed reform of the  ‘no win, no fee’ system. And later that month, we also saw the introduction of fixed recoverable costs for RTA claims in the Portal after a desperate last minute judicial review from the claimant lobby, as well as the Portal’s extension to EL and PL claims.

The impact of these reforms has been hotly debated by consumers, politicians and the media. However, the evidence clearly shows that the industry is living up to its commitment to pass on cost savings to consumers following reform.

But the key question is whether, without further effective action to tackle whiplash claims, these premium reductions are sustainable.

While political and consumer interest in whiplash is welcome, what is needed is action on reform. 

Even with the current Competition Commission investigation, the number and cost of whiplash claims remains one of the key issues facing insurers, attracting by far the most attention. No more so than from the Transport Select Committee (TSC), who has just closed their second inquiry this year into the issue - the ABI response can be found here (pdf 70kB).

While political and consumer interest in whiplash is welcome, what is needed is action on reform. Having consulted earlier in the year, the Government has concluded that, although recognising the strong case for increasing the Small Claims Track limit, further safeguards are required before an increase should proceed. That’s a missed opportunity to make meaningful change.

That leaves the reform of the medico-legal reporting system that the Government has announced as the key focus going forward. While there is significant consensus among stakeholders over the changes that are required, just like deciding whether Mum or Aunt Bessie makes it best, the proof of the Christmas pudding is in the eating. And there is still much to be done to work through the detail of the reforms.

There is a clear expectation however, that insurers will also play their role in helping combat fraudulent whiplash claims. Both the Government and TSC highlighted issues with the use by some insurers of offers to settle personal injury claims without the benefit of a medical report. While there are clear commercial reasons for this practice, many in the industry will use their time by the log fire this festive season to reflect on whether this practice is sustainable in a reformed medico-legal reporting environment.

There remains uncertainty over what the new system will look like. But what is certain, is that this time next year, as we make the annual promise to ourselves not to eat too much, we will be reflecting on yet another year of significant change in the motor insurance market.

Rob Cummings is Manager, Civil Justice and Data Strategy at the Association of British Insurers.

Last updated 29/06/2016