Motorists are benefitting from lower insurance premiums as a direct result of whiplash reforms, a Treasury assessment has concluded.
The government was required to lay a report before parliament before 1 April on the effect of the Civil Liability Act 2018, which has significantly reduced the number of low-value RTA claims.
That report, published yesterday, amounts to a 10-page document featuring three tables of figures provided by insurers and a single sentence summarising the findings.
The Treasury concludes: ‘The information provided by insurers shows that individuals who are policyholders benefitted from the reductions in costs for insurers through paying lower premiums over the reporting period of 2020 to 2023 than would otherwise have been the case if the act didn’t exist.’
The insurers’ data shows that premiums in 2022/23 averaged £351 - and would have been £367 without the reforms (a saving of 4%). The total gross written premiums was £11.8bn, which would have been £12.3bn but for the legislation.
The level of savings for motorists has increased each year since the act was implemented in 2021, but is some way short of the government’s prediction in 2021 that average premiums would come down by £35 as a result of reforms.
The act introduced an online portal for handling RTA claims and abolished the recoverability of legal costs for claimed worth less than £5,000. The result has been a consistent fall in the number of claims made and insurers saving a total of £198m (almost 8%) in the value of claims.
Eight of the 30 insurers who fed into the data said there had been wider benefits such as investment in technology to improve customer journeys and the claims experience. A small number of firms expressed concern that the cost savings from whiplash injuries had been undermined by increases in claims for non-whiplash injuries.
The Treasury assessment says an unspecified number of respondents noted a decrease in resolution time for whiplash-only injuries, possibly due to mandatory medical reports deterring fraudulent claimants.
Jonathan Scarsbrook, immediate past president of the Association of Personal Injury Lawyers, said there had been a 71% increase in overall motor insurance premiums since the reforms were introduced, despite injury claim costs reducing. He cited evidence that repair costs are behind these rising premiums, effectively negating any perceived benefit from the Civil Liability Act.
‘This is a lose-lose situation for consumers, and they should be furious,’ he added. ‘They are spending more than ever for compulsory insurance on the understanding that they will be looked after if anything goes wrong.
‘While vehicle damage can be inconvenient and worrying, bodily harm is the worst possible thing that can happen to someone.’
This article is now closed for comment.
20 Readers' comments