Car insurance premiums, already at record lows, could fall even further this year thanks to new reforms around whiplash claims, the government says.
The Ministry of Justice’s new Official Injury Claim portal is intended to simplify the traffic-accident claims process, cutting expensive lawyers out of the equation.
It also aims to combat what the government sees as an ‘unacceptably high’ number of whiplash claims stemming from possible fraud.
Reduced whiplash payouts will save insurers money, and they’ve pledged to pass on savings to customers by lowering premiums.
Here, we look at how the new portal works, and the difference it could make to your premium.
How the new claims portal works
You can visit the Official Injury Claim portal website to start the claims process. From there you can sign in or register to create an account.
When logged in, you’ll be able to launch claims for road-traffic-related personal injuries valued at less than £5,000, including claims for whiplash.
The government anticipates that most traffic-accident claims will eventually be settled through this portal.
Crucially, you’ll have to attach medical evidence for whiplash claims. Previously, this wasn’t a requirement and these claims could be settled without evidence.
- Find out more: making a car insurance claim
How will this combat whiplash fraud?
The Insurance Fraud Bureau (IFB) found that of 2.7m car insurance claims made between October 2019 and December 2020, 170,000 could be linked to so-called ‘crash for cash’ networks.
Crash for cash involves fraudsters faking or deliberately causing traffic accidents in order to make personal injury claims against other drivers. It’s often organised and carried out by criminal gangs.
This fraud will have an impact on insurance premiums, especially in areas identified as ‘crash for cash hotspots’, where the crimes are prevalent. Birmingham, Bradford, Manchester, London and Luton are among the most affected areas, according to the IFB.
So what difference will this new portal make?
First, there’s the need for medical evidence. It’s thought that this will deter some fraudulent claimants who are making exaggerated claims.
Second, the portal comes with new tariffs for whiplash injury compensation, regulating what victims (or fraudsters) can claim for.
These tariffs start at £240 for injuries that last less than three months, and can be more than £4,000 for those lasting up to two years.
- Find out more: do you live in a crash for cash hotspot?
How could it save you money?
You won’t see an immediate rebate now that this new portal has been introduced. The idea is that lower payouts mean insurers can set lower premiums in the future.
The government has estimated that these new rules will save car insurers more than £1bn. Insurers are obliged to pass savings related to these measures on to customers. This is expected to work out at a reduction of £35 each per premium.
While insurers have welcomed the reforms, not everyone is as pleased to see them.
Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations, says: ‘There is still nothing to show that the changes will do much more than save insurers money.’
If the government estimate is correct, you could see your premium fall. But it’s worth noting that we might not see what the full effect is for a while; the government is set to review the portal’s success in 2024.
- Find out more: how to find cheap car insurance