Whiplash cuts to reduce premiums

Car insurance premiums are most likely to be reduced as a result of plans to cut compensation for whiplash injuries in England and Wales.

Whiplash claims have risen by 50 percent over the past decade, costing insurance companies about GBP1 billion a year.

The government said insurers have pledged to pass on the savings, worth about GBP40 a year.

Following a promise made last year, ministers are looking at scrapping the right to compensation or capping it.

In its consultation, the Ministry of Justice suggests that such payments – which are separate from medical bills or loss of earnings – could be banned.

Another option is capping them at a maximum of GBP425. By contrast the current average payout is GBP1,850.

The government pointed out that while the number of road accidents in the UK has been falling, the number of whiplash claims has been increasing.

“For too long some have exploited a rampant compensation culture and seen whiplash claims an easy payday, driving up costs for millions of law-abiding motorists,” said justice secretary Liz Truss to the BBC.

“These reforms will crack down on minor, exaggerated and fraudulent claims.”