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Whiplash Claims Reform benefits UK Insurers

Consideration was given for the editing and publication of this post.

Being involved in a traffic accident is no laughing matter. The ramifications of colliding with another vehicle on the road can be steep, including moderate to severe injuries, costly damage to the vehicle, and lasting psychological damage. One of the most common consequences of a road traffic accident is soft tissue damage, often referred to as whiplash, where vertebrae is damaged or disjointed which in turn causes lasting pain and a decreased range of motion. When whiplash is the result of a road traffic accident, individuals turn to their insurers for the financial assistance necessary to be made whole. Unfortunately, a recent call for reform among UK insurance companies may stop traffic accident victims from getting the compensation they need and deserve.

In late 2016, the soft tissue injury claims reform was published for consultation, backed by the UK government and the British Association of Insurers. Within the lengthy document, attention was brought to the perceived compensation culture running rampant throughout the country. Abusive, excessive claims relating to soft tissue injuries like whiplash cost insurance companies money and ultimately, those costs are passed down to motorists who take care to be cautious on the road. To combat the rising cost of premiums burdening honest road users, the soft tissue injury claim reform lays out four cost-cutting recommendations.

First, the total amount paid for claims related to whiplash claims should no longer include expenses for pain, suffering, or loss of amenity. If a claim is paid by the insurer, total compensation should not exceed £400 or £425 for cases involving some degree of psychological distress. In addition putting an unrealistic cap on available compensation, the reform suggests increasing the small claims court maximum to £5,000, up from the current £1,000 limit. Forcing claimants into a small claims track means requests for compensation are limited to certain costs and most certainly do not easily include sound legal advice. The recommendations are intended to dissuade fraudulent claims for whiplash – if imposed, millions of motorists suffering from soft tissue injuries may face inadequate compensation for their suffering.

Who Wins?

The loudest proponents of soft tissue injury claims reform have been, by far, insurers around the country. In the introduction letter included in the reform consultation, specific highlights of the landscape of road traffic accidents are included to promote a clear, albeit skewed, narrative. Insurers and the government claim the number of whiplash claims has increased by 50% of the last ten years, although there is no note of the parallel increase in the number of drivers on the road. Similarly, the reform states the average whiplash claim costs insurers £1,850 – a drop in the bucket for insurers given their steady increase in premium costs passed down to the insured population.

The most glaring issue, read only between the lines of the reform recommendations, is the idea that capping whiplash compensation will help reduce the cost of motorist coverage throughout the country. Insurers claim that the rise of insurance premiums since 2013 can be directly linked to a compensation culture; however, the statistics show that the total cost of claims and the total number of accidents have decreased over the same period. It’s clear that the estimated savings of £1 billion brought on by the reform changes is not called for by the driving community, but instead, a desire by insurance companies looking for greater profit margins.

The Case of Vulnerable Road Users

As if the reason behind the soft tissue injury claims reform is not enough to question the objectives of the insurance industry, the case of vulnerable drivers and the implications the changes they will face is dubious at best. A representative from a UK motorcycle accident specialist law firm explains, “There is a risk that bikers and other vulnerable road users may be adversely affected by these latest reforms. Injuries to motorcyclists are out of proportion to their presence on the road; they make up 1% of total road traffic, but account for 19% of all road user deaths. Because vulnerable road users do not have the protection of a vehicle surrounding them, their injuries are often more severe and claims more complex than other road occupants.”

The ability to receive adequate compensation as a vulnerable road user is seriously impeded under the proposed reforms. Capping compensation at a laughable £400 combined with the inability to retain professional legal help that is often required in complex road traffic accident claims leaves vulnerable road users at a steep disadvantage against insurers. The motorcycle accident law firm tasks the Ministry of Justice to provide clarity in its proposed reforms in an effort to safeguard pedestrians, motorcyclists, and bicyclists from the adverse effects of restricting soft tissue injury claims.

Although the reform has yet to be established as firm regulation in the UK, it is grossly apparent that the insurance companies stand to benefit the most should the changes come to fruition. In all likelihood, the savings experienced from a reduction in fraudulent whiplash claims will not be passed down to insured motorists, but instead, will continue to boost the profits of insurers – to the detriment of road users throughout the country.