Man holding neck

At last some good news for motorists. The Government have introduced a Bill to reform the law relating to whiplash claims and the way in which personal injury claims are handled. Known as the Discount Rate, this determines the compensation people receive following an accident.

Road traffic collisions have fallen by 11% in the last five years and whiplash claims have declined by 65,000 per year. During the same period, however, insurance claims have rocketed by 18,000 to 780,000 a year since 2014, driven by an increase in other neck and back injury claims of nearly 85,000.

Association of British Insurers (ABI) Director General, Huw Evans said: “If passed, these proposals would be great news for motorists. People and businesses are paying more for their motor insurance than ever before and we need changes to the law to tackle some of the root causes. Soft tissue injury claims have been rising year on year since 2014 as cold calling claims firms have thrived, driving up the cost of insurance.

“This Bill will ensure people in England and Wales receive fair compensation while reducing excess costs in the system. In a competitive market such cost benefits get passed through to customers, as they did after previous reforms in 2012 when average motor premiums fell by £50 over the next two years.

“The sensible new framework proposed for the personal injury Discount Rate would also deliver a system that is fair for customers, claimants and taxpayers. It is now important that Parliament agrees these proposals swiftly so people across England and Wales can start to see the benefits.”

According to the ABI there are six important factors that determine motor insurance costs:

  • Personal injury costs add more than a third to the cost of insurance. Bodily injury claims are the biggest contributor towards claims costs and at nearly 37% on average, are nearly double the next most significant factor (overheads) at 19%.
  • Claims are rising. The Government’s own data shows that the number of soft tissue injury claims has risen by 18,000 to 780,000 a year since 2014. This has been driven by increase in other neck and back injury claims of nearly 85,000, while whiplash claims have declined by over 65,000. At the same time road traffic accidents have fallen 11% in the last five years.
  • Cold calling claims cowboys are driving it. There are more than 750 personal injury claims management companies in the UK, turning over nearly £200 million a year. Since April 2017 the Claims Management Regulator has cancelled 69 licences in the sector.
  • The UK is an international outlier. At minus 0.75% we have a personal injury discount rate that is the lowest (and therefore most costly) among any major economy in the world. Whiplash style claims are much more common in the UK than in other major economies.
  • Motor insurance is getting more expensive. Average motor premiums have risen for eight consecutive quarters, reaching a record £493 at the end of 2017.
  • Insurers have a track record of passing on cost savings. The industry passed on savings under reforms introduced in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), which saw premiums fall by £50 on average over the next two years.


Following the announcement of the Civil Liability Bill leaders of 26 insurance companies representing the vast majority of the UK motor and liability market have written to the Lord Chancellor, David Gauke, setting out their commitment to pass cost benefits on to customers. The signatories represent 86% of the motor and liability market written by ABI members.