Drivers will have to wait until 2021 for promised whiplash reforms – what will it mean for your premiums?

24 April 2020

New whiplash portal delayed until next April

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Drivers will have to wait until 2021 for cheaper premiums, as reforms to how whiplash claims are handled have been delayed due to coronavirus.

The Ministry of Justice has put back the launch of an online claims portal meant to cut the cost of insurers’ whiplash personal injury bills and save drivers money on their premiums.

Many whiplash claims are genuine, but insurers say many are fake or inflated, and all drivers pay the price via their insurance bills.

One joint insurer and Government solution to the problem was an online portal that would let injured drivers handle claims themselves without the need for legal help, which can be expensive.

This was meant to launch on 6 April, then got delayed to August, and has now been put back further to April 2021.

Robert Buckland, the justice secretary, says: “While the whiplash reform measures remain important, the Government is committed to acting to ease the disruption and pressures caused by the Covid-19 outbreak where it can.

“As a result, the Government has considered representations from key stakeholder groups and agrees that now is not the time to press ahead with significant transformational change to the personal injury sector.”

What does this mean for my premiums?

Drivers’ premiums may go down when the portal is live, but the amount they will save is uncertain, and any saving has obviously been delayed.

Insurers pass the cost of whiplash claims to drivers in higher insurance costs. These added £90 a year to the average motor premium during the peak of whiplash.

However, that has been revised down to around £35 a year now, according to Government figures.

Dan Hutson, head of motor insurance at Comparethemarket, says: "While another delay to the implementation of the whiplash reforms may make sense in the context of the coronavirus pandemic, an unintended consequence could be that insurers are forced to keep premiums higher for many and even unaffordable for some." 

The cost of setting up the portal is paid by insurers, and the final bill could also hit any savings to drivers. The cost has already topped £15m, according to sources close to the project.

James Dalton, director of general insurance at the Association of British Insurers, says: “Given this unprecedented situation, we understand that a delay to implementing these much-needed reforms is necessary.

“However, any delay beyond what is absolutely needed will impact on the benefits to claimants and consumers.”

What else needs to be done?

Consumer spokespeople also want the Government to bring in a promised scheme to save drivers money on legal fees.

Between 10% and 60% of personal injury claims involve a dispute about who was responsible for the crash.

Cases with disputed liability will not be able to go through the portal. The only other option is to go to court to decide liability, which can take more than two years and rack up expensive legal bills.

The Government solution was to set up an online Alternative Dispute Resolution (ADR) service, meant to be a cheap and quick alternative to the courts. However, the scheme was cancelled in February due to expense.

This was despite insurers promising to fund the scheme whatever the cost.

Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations, says no ADR system means many genuinely injured drivers would give up if liability was disputed by the at-fault driver’s insurers.

“It gives insurers a huge incentive to deny liability,” Scott says.

If liability is eventually decided in the courts, but the compensation amount is disputed, claimants must go back to court to get that sorted too.

Scott wants Government to take advantage of the 12-month delay by trying again to set up the ADR scheme.

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