The insurance industry has suggested for the first time that whiplash compensation could be removed altogether.

James Dalton, head of motor and liability for the Association of British Insurers, said today it was time for a ‘public policy debate’ on removing all damages for low-value claims, instead asking insurers to pay directly just for treatment.

Dalton (pictured) has previously called for discussion on reducing damages paid to whiplash victims but this is the first time a complete removal has been mooted. 

‘We need a debate about whether someone should be awarded money for a low-value, low-impact and very minor injury claim,’ he told the Modern Claims conference in London. ‘It’s a debate about whether you should be provided with rehabilitation and no cash. That is a legitimate public policy debate for society to have and politicians to decide on.’

Dalton also reignited the argument about the value of solicitors in low-value claims and said the ABI is working on safeguards to persuade the government to raise the small claims limit.

The Ministry of Justice last year opted not to increase the limit but Dalton said he was confident that will change ‘depending on the outcome of the election’.

He added: ‘There will always be a role for PI lawyers in complex, high-value claims – my question is whether there is a place for them at all in low-value factory-based claims. The MoJ made it clear last year there were good arguments for the claims limit to up to £5,000 – that will come up again sooner rather than later.’

Claimant groups the Motor Accident Solicitors Society (MASS) and Association of Personal Injury Lawyers (APIL) said they would fight any attempt to remove compensation altogether from whiplash victims.

MASS chair Craig Budsworth said recompense should always include loss of amenity as well as rehabilitation. 

‘Even if their injury means they can’t go to the gym – for some people that is their life and that deserves compensation. We will be saying that is wrong for the innocent accident victim.’

Deborah Evans, chief executive of APIL, said all sides had worked together on ways to combat fraud in the system, but removing solicitors would take away a vital barrier to fraudulent claims.

She added: ‘It has always been much easier when you have the client across the table from you to tell if they are being truthful. The more removed we get from the client the more fraud will prosper.’