Leading motor insurers have promised to pass on to customers 100% of the savings they make from curbs on whiplash claims, the government announced today.

A Ministry of Justice press release said the move would cut annual insurance premiums by around £50.

According to the statement, the agreement to pass on savings follows 'a recent roundtable meeting' to discuss the announcement in last month's autumn statement that the government would end the right to cash compensation for minor whiplash injuries and raise the upper limit for personal injury claims in the small claims track from £1,000 to £5,000.

The measures will be introduced 'as soon as possible', the ministry said. Detail of the measures, which are opposed by the Law Society, will be consulted on early next year.  

Justice minister Lord Faulks said insurers had promised to pass on the money saved by the curb on claims as quickly as possible.

'We are determined to crack down on the culture of fraud and exaggerated claims in the motor insurance industry, which means car owners are forced to pay higher premiums to cover the false claims of others. This culture is boosted by an industry that encourages exaggerated claims through cold calling and it is right that we tackle this. Insurers back these much-needed reforms and have committed to handing over savings to motorists quickly.'

James Dalton (pictured), director of general Insurance at the Association of British Insurers, said: 'The government reforms are a significant breakthrough in tackling the UK’s compensation culture and are good news for motorists.

'Reforms to the small claims track limit and the end to cash compensation, for low value injuries, will help to bring down unnecessary costs in the motor insurance market and honest motorists should be the beneficiaries.'

The MoJ announcement quotes insurers Aviva and LV= as pledging to pass on all savings to customers.