Campaigners against a government overhaul of the personal injury market say new documents have emerged to demolish promises of insurance premium savings. The Ministry of Justice has sold the idea of reforms partly on the basis that motorists will benefit from the resulting savings.
The initial estimate, in the November 2015 budget, was that insurance costs would be cut by up to £50. By the time of this year’s Queen’s Speech, which included the proposals in the Civil Liability Bill, the saving was down to £35.
Campaign group A2J, led by claimant lawyers, now suggests official figures produced by the Treasury following last week’s budget revise the saving to as little as £16 a year.
Officials have published a table mapping the impact of ‘reform to motor insurance claims’ on insurance premium tax. Figures included in the table show the government expects the reforms to contribute to an aggregate reduction in motor insurance premiums of £458m a year.
Dividing that number among 28m motorists, A2J arrives at the £16 figure.
Group spokesman Andrew Twambley said: ‘The government is preparing to drive a coach and horses through this country’s civil justice system, which has underpinned our historic rights for centuries, for the sake of £16, or less than 2% of the cost of a typical car insurance policy. That is patently absurd.’
The government plans to legislate on a tariff for whiplash damages and a ban on insurers making offers to settle before claimants have had a medical examination.
Alongside the bill, but requiring only secondary legislation, the MoJ also wants to increase the small claims limit from £1,000 to £5,000 for whiplash claims and £2,000 for all other personal injury claims.
Twambley added: ‘In light of this new information from the Treasury, following the budget, we call on the MoJ to update its official assessment of the impact of the whiplash reforms, so that MPs can decide whether denying legal advice to 600,000 injured people a year for the sake of £16 they’ll never receive is a policy this country can be proud of.’
Asked last month by the justice committee whether he intended to increase the small claims limit, lord chancellor David Lidington committed to the reforms. Lidington explained the £2,000 limit would still ensure it was possible to pursue claims, for example after an accident at work.
The reason for the disparity with RTA claims, he said, was the relatively high number of whiplash cases in comparison with other advanced economies in the world.