Reforms to road traffic accident (RTA) claims have been recently announced by the Ministry of Justice (MoJ). The reforms, which focus on compensation for whiplash and minor psychological claims, will be introduced on 1st October 2018. They include a fixed tariff for whiplash compensation, starting at £225.

Why is the government making these changes to whiplash compensation?

Statistics reveal the number of such claims remain around 680,000 per year; around 90% of all RTA personal injury claims. Many of these claims may be for low-level whiplash injuries, and include soft-tissue injuries to the neck and back.

The government believes that some Claimants may be encouraged to exaggerate the severity of their injuries in order to benefit financially, and the MoJ’s proposals include reducing the scope for whiplash claims to be displaced into other claim categories.

What about the psychological impact of RTAs?

Although claims for diagnosable serious psychological injuries, such as post-traumatic stress disorder or depression, will not be affected by the reforms, psychological injuries including shock and travel anxiety will be classed as minor. 

After consultation, the government decided not to remove compensation for general damages (pain, suffering and loss of amenity), but instead is to create a tariff of 7 bands for claims with an expected injury duration of between 0 and 24 months. These figures will be significantly lower than the current Judicial College Guideline amounts.

For example, an injury with an expected duration of 3 months will attract compensation of £225, compared with a potential £2,050. A Claimant whose injuries are expected to affect him for 13-15 months will receive £1,820 compensation instead of a maximum £6,600. The tariff includes both the physical whiplash and the minor psychological injury elements of the claim as one payment.

In exceptional circumstances judges may, at their discretion, increase or decrease awards by up to 20%. 

Will it be necessary to go to court?

There will also be a complete ban on offers to settle RTA whiplash claims where there is no medical evidence to support the claim. This includes the making, soliciting, accepting and receiving of such offers. 

Since the government plans to increase the limit for RTA related claims in the small claims court to £5,000, it believes that Claimants may choose to pursue their compensation without consulting a lawyer. However this would mean they would be liable for paying their own legal costs.

Although it states that there is plenty of help and support available for Claimants who act for themselves, the government does accept that some Claimants may not fully understand the process. 

Other issues regarding compensation have been raised during the consultation and the MoJ’s response is due to be issued shortly.

Will car insurance come down in price?

An estimate of the expected savings to insurance providers will be published, and these savings are expected to be passed on in the form of reduced costs of motor insurance policies.