After legislation passed in 2018 for the implementation of the Civil Liability Act, the whiplash reforms are set to come into effect in May 2021.
What are the whiplash reforms?
The term ‘whiplash reforms’ is used to describe a number of reforms that are set to be implemented in the UK. The aim of these reforms is to reduce the cost and occurrence of motor insurance in the UK – costs both for the insurer and the motorist.
The series of reforms set to come into force in May 2021 are (according to UK Law firm, Weightmans):
- The increase in the Small Claims Track (SCT) limit for personal injury claims arising out of motor accidents from £1,000 to £5,000;
- The tariffing of whiplash injuries sustained by vehicle occupants [Part 1 of the Civil Liabilities Act 2018];
- The creation of an on-line portal for SCT value injury claims arising out of motor accidents (akin to the current RTA MoJ portal).
How do insurers save on costs?
Whiplash claims have been famously known for being associated with fraudulent claims. More than 1,500 whiplash claims are made in the UK every day, costing the insurance industry more than £2 billion a year – and adding £90 to the average annual motor insurance premium (ABI).
The more fraudulent claims there are, the more this costs the insurer. However, the whiplash reforms now mean these claims will be regulated and validated more stringently. The reforms will:
- Provide a tariff of payments for some aspects of whiplash compensation
- Introduce a computerised Portal system which will be simple and easy to use
- Simplify the claims system so legal advice is only paid for on road traffic personal injury claims over £5,000 (rather than £1,000)
- Introduce a ban on seeking or offering to settle whiplash claims without medical evidence of the injury.
How insurers can prepare for the whiplash reforms
The whiplash reforms will mean significant changes to the way particular claims are handled. Although the cost benefit ought to come clearer over time, insurers will need to be aware of how they integrate with the new systems and processes.
Automated claims systems are infamously tricky for insurers to implement and navigate. Insurers will have been exploring what technology needs to be secured in order for the claims portal to be accessed, as well as processing these claims in a different way. However, if there are gaps in knowledge and IT infrastructure, it’s imperative that insurers act as soon as possible to address this. The new method of handling such claims will be reflected not only in the IT infrastructure, but in the organisational set-up too. Areas for adult claims, child claims and for varying amounts need to be considered.