Whiplash reforms: the future of RTA claims

We spoke to Modern Claims Magazine to discuss the potential benefits or pitfalls to a fixed tariff system for whiplash compensation, and what this could mean for the legal sector. 

The MoJ's whiplash claims reforms, although significantly challenged by many in the industry, are due to take effect towards the end of 2018.

According to the MoJ, the reforms firstly will crack down on the compensation culture epidemic we are experiencing. Most will be in agreement that those who make fraudulent claims do need to be exposed and prosecuted as such, however introducing a fixed tariff system may not be a guaranteed method of eliminating these claims entirely. There could still be plenty of potential for exaggeration so as to tip the into a higher level of compensation, in theory meaning insurers will still need to identify fraudulent claims, contrary to the Government's proposals.

Many insurance companies are concerned at the amount of fraudulent claims and state this is the reason for increased premiums, however claimant solicitors do not believe that this has been sufficiently evidenced by independent figures. Many are arguing that the number of whiplash claims registered by the Government's Compensation Recovery Unit suggest a decrease in figures. Upon analysis of these statistics, the MoJ believes the differences in the labelling of claims may be responsible, as when soft-tissue injury claims labelled 'back' and 'neck' are combined with 'whiplash' claims, the number increases significantly.

Another benefit to the proposal, as per the MoJ, is a means to end the cycle of honest motorists paying out higher premiums to cover false claims. It's believed that the current 'substantial financial incentives' encourage exaggeration of the severity of injuries sustained, and introducing a fixed tariff system will tackle the issue. Agreeably, banning claims without medical evidence is sure to actively discourage many, and it's expected as a result it will cut car insurance premiums by £40 a year.

These savings can then be passed directly onto insurance companies' customers. However, this has been met with scrutiny from some, as the Government is on record saying they will not force insurance companies to forward the savings, leading to the belief by many that premiums will realistically continue to rise.

Ultimately it remains to be seen how significantly these changes will affect the legal sector as a whole, and more specifically how PI claims will be managed under the new reforms. The next year or so will no doubt provide an interesting insight into the future of RTA claims, and how the legal service market is going to adapt.