Probitas 1492 Comment on the Autumn Review and Statement 2015

More than 1,500 whiplash claims are made in the UK every day[1]. In the 2015 Spending Review and Autumn Statement, Chancellor George Osborne announced that motor insurance costs would be reduced by ending the right to cash compensation for minor whiplash injuries. The Government is also “determined to crack down on the fraud and claims culture in motor insurance”. Whilst supportive of these measures, Probitas 1492 believes there are many questions remaining on how it will be put into practice.

This initiative is hoped to end the current cycle of responsible motorists paying higher premiums to cover the false injury claims made by others. Whiplash claims currently cost the country £2billion per year, which is around £90 per motor insurance policy. The Government says this is disproportionate to any injury suffered and that the new measures addressing minor whiplash claims will remove £1billion from the cost of providing motor insurance.

It is expected that insurers will pass this saving onto consumers, with reductions of up to £50 per motor insurance policy. Given that the average motor insurance premium in Q3 2015 was £379[2], this could be around 13%. High competition in the industry should lead to these savings being honoured and firms operating fleets are particularly expected to benefit from the new measures.

However, the Autumn Statement specifies that the crackdown is on ‘minor’ whiplash injuries, so what exactly constitutes a ‘major’ whiplash injury? The Government’s proposals state that claimants will still be able to claim for special damages, but will no longer be entitled to claim for general damages. This, surely, will reduce the number of claims substantially. Tangible losses would need to be incurred to receive a pay-out; the injury would have to warrant medical expense, or authorised time off work resulting in loss of earnings.

But how can a medical professional prove, or disprove, whether a whiplash claimant is in pain and requires time off work? Many of the various symptoms of whiplash rely heavily on a description given by the claimant; for example, neck pain and stiffness, headaches, pins and needles, etc. In fact, NHS Choices website states “whiplash can usually be diagnosed from a description of your symptoms” and “tests and scans aren’t usually required”. In which case, unless you’re relying on the honesty of the claimant, would ‘major’ whiplash – one which is eligible for a claim – be defined by injuries requiring such medical tests, such as neurological damage and spinal cord injury?

Physiotherapy, which is a common treatment for whiplash, is often a policy add-on at extra cost. It would need to be made very clear in policy wording whether this is covered as standard, or whether this is a separate cover, which can be purchased.

Details of the Government’s crack-down on whiplash claims are to be consulted on in the new year. It will be interesting to find out how a ‘major’ whiplash injury will be defined; how it must be evidenced; whether timescales for making such a claim will be stipulated; and how far insurers will go in honouring the savings made on premiums. We look forward to finding out!

[1] FleetNews, March 2015

[2] ABI private motor insurance statistics Q3 2015