The government is set to unveil its plans to reduce the huge number of whiplash claims that have been pushing up insurance premiums.
On Tuesday, Justice secretary Chris Grayling will launch a consultation on creating new independent medical panels to improve the diagnosis of whiplash injuries.
This aims to ensure that genuine claims can still go ahead, but exaggerated, misrepresented or fraudulent claims are robustly challenged.
It will also consult on options to allow more whiplash cases to be challenged in the small claims court and to change the current position where it can be cheaper for insurance companies to accept questionable claims than to contest them.
Grayling said: “For too long honest drivers have been bearing the price of a system that has been open to abuse and it is time for that to change.
“We are proposing action to support effective whiplash diagnosis by medical experts and to simplify procedures which will help bring speculative or fraudulent claims before a judge – so genuine claims can still be settled but fraudsters are left in no doubt there will be no more easy paydays.”
The government said it took action after figures showed there had been a 60% rise in personal injury claims related to road accidents since 2006, despite vehicles becoming safer and a 20% reduction in the number of reported accidents over the same period.
It estimated that whiplash claims cost £2bn in 2010, or £90 for each policy.
This is the latest stage of a series of significant civil justice reforms by the government, designed to reduce legal costs and stop the growth of a compensation culture in England and Wales.
Tuesday’s consultation complements the civil justice law changes that will come into effect in April 2013, including the ban on referral fees.
ABI head of motor and liability James Dalton said: “We are pleased that the government recognises that tough action is needed to protect honest motorists from the UK’s whiplash epidemic. For too long, whiplash has been seen as the ‘fraud of choice’.
“Our roads are safer, yet every day more than 1,500 whiplash claims are made. These claims add an extra £90 a year to the average motor insurance premium.
“More effective diagnosis of whiplash will help genuine claimants get paid out quickly and reduce the scope for fraud, so helping to ensure that honest motorists do not end up footing the bill for the cheats through higher insurance premiums.”
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