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How could changes to personal injury claims impact you?

Insurance claim

Here’s Tom Jones of Thompsons Solicitors on whether increasing the small claims limit for personal injury claims from £1,000 to £5,000 is really in the interests of consumers.

‘A win for the consumer’ is how one car insurer described government plans to remove the entitlement to legal costs in road accident claims worth under £5,000. The Government has proposed that road accident claims are handled in the small claims court, and that the limit for these claims should be increased from £1,000 to £5,000.

The Government says the reform is part of a ‘crack down on the fraud and claims culture in motor insurance’ and will generate £1bn in annual savings (an ‘average saving of £40 – £50 per motor insurance policy’), which the Government ‘expect’ the insurers to pass on to consumers.

But is the problem of ‘fraudulent’ whiplash claims as big as insurers say it is? And what could the impact be for you?

How big is the ‘whiplash’ problem?

Unfortunately fraud almost certainly exists in motor claims, but it’s difficult to tell how big it is. There are no independently verified figures and the Government gets its figures from the insurance industry, who include cases where they have ‘suspicions’ even if they aren’t proved or pursued.

Despite the extremely wide definition given to it, ‘fraud’ accounts for less than 5% of all claims and the number of convictions for motor insurance fraud are a small fraction of this, hardly the ‘pandemic’ one insurer has described. And the answer you would’ve thought is simple – if it’s fraud, don’t pay out.

One thing, however, isn’t in dispute: the insurers are paying out far less in claims than they were. Their own figures show that claims costs were 29% lower in 2014 than in 2010 – a saving of £2.42 billion – and profits and dividends are at an all-time high. Direct Line reported a 14% rise in profits in 2015 and paid out £689m in dividends.

Will insurers pass on savings to consumers?

The Government says it won’t intervene to force insurers to pass on savings, saying premium prices are ‘a commercial matter’ that can be left to an ‘intensely competitive’ market.

In fact, the car insurance market is dominated by five companies that between them account for 57% of all motor policies in the UK and lower claims costs in 2014 haven’t translated into lower premiums. Prices increased in 2014 and have been on an upward trend since.

Should motorists stop having a right to legal representation?

If the small claims limit for personal injury claims is raised, injuries including for example permanent scarring will be treated by the courts in the same way as a claim for a broken washing machine. People injured on the roads will only be able to have a lawyer help them if they pay for it upfront or out of their damages. Alternatively, they will have to take on the insurer’s negotiators and lawyers on their own, in their own time.

So, what do you think; are these proposed changes to the small claims limit for personal injury claims in your interests?

This is a guest contribution by Tom Jones. Tom is a senior partner at national trade union law firm Thompsons Solicitors. All opinions are Tom’s own, not necessarily those of Which?


I am very much in favour of cutting down on fraud but I am concerned about the raising of the small claims limit. Will Which? have the opportunity to make an input on behalf of consumers?

This comment was removed at the request of the user

Is not legal protection insurance, which does not cost a great deal, there to provide legal assistance if your claim has merit?

I’m not sure that I’d see 57% of the market as “dominant” with 43% open to other companies. Nor would 5% of claims regarded as fraudulent be small in money terms.

Seems it may have some major ramifications. I am unversed in Small Claims Courts and their workload.

Has Which? prepared a position paper for us/ the organisation?

Having a little ferret I found this useful paper though it is not about the limits of the SCC. Page 12 seems to identify a major weakness in the system.


Hello everyone, I thought you would like to see the full statement from the Government when this change was first announced in the Autumn Statement, which Tom references in his piece:

“The government is determined to crack down on the fraud and claims culture in motor insurance. Whiplash claims cost the country £2bn a year, an average of £90 per motor insurance policy [figures it attributes to the Association of British Insurers], which is out of all proportion to any genuine injury suffered.

“The government intends to introduce measures to end the right to cash compensation for minor whiplash injuries, and will consult on the details in the New Year.

“This will end the cycle in which responsible motorists pay higher premiums to cover false claims by others. It will remove over £1bn from the cost of providing motor insurance and the government expects the insurance industry to pass an average saving of £40 to £50 per motor insurance policy on to consumers.”

“More injuries will also be able to go to the small claims court as the upper limit for these claims will be increased from £1,000 to £5,000.”

You may also be interested in the Government’s response to a petition on this matter:

The Government is concerned about the number of whiplash claims and the impact on premiums. Therefore we announced new measures to control costs, including raising the small claims limit to £5,000.

Raising the personal injury small claims limit will remove the ability of the claimant to recover legal costs associated with such claims by transferring them to the small claims court. The personal injury small claims limit has been set at £1,000 for nearly 25 years and the Government believes it is both justifiable and proportionate to increase the limit to £5,000.

In addition, the reforms will remove the right to claim for damages for pain, suffering and loss of amenity for minor whiplash injuries. However, people who suffer more serious injuries will continue to be entitled to such compensation. Compensation for other areas of loss such as the costs of medical treatment or for loss of earnings will remain available to all claimants.

These reforms will end the cycle in which innocent car owners pay higher premiums to cover false or unnecessary claims by others and the Government expects insurers to pass savings of £40-£50 per average motor insurance policy on to consumers. Two companies have already said publicly that they will pass all the savings back to consumers.

The Government will consult on the detail of the proposals early in 2016 including on any safeguards considered necessary. A detailed impact assessment will be published alongside the consultation.

If the government is so concerned with reducing driver’s insurance premiums, why have they just raised the insurance premium tax?

Indeed the extra 0.5% represents a tax increase of over 5%. But 10% is a nice round number and the increase appears negligible. However, none of the insurance companies will absorb the 0.5% tax uplift – it will be passed on in full as usual.

I have talked to asolicitor active in this field and her opinion is that an increase to £2000 sould be justifiable given inflation. However the £5,000 is excessive and she fears many people will settle for the first sum offered as they have no idea as to what is paid.

The Government is also monetising justice asking for payments up-front to hold cases open where a case is for serious money but the nature of the injuries or disability can take years to be resolved. Hardly natural justice forcing someone to stump up so that the case can be fully explored. Getting specialists to opine over a future disability and life effects is not simple.

venessa says:
10 January 2018

It only seems to benefit the insurance companies, who will not have to payout, as consumers wont be able to afford the lawyers fees, and certainly wont be able to take on the corporate legal teams.