ILC ARTICLE

Whiplash reforms: a four-month report 

26th October 2021

The Civil Liability Act and Whiplash Reforms came into force on 31 May, but more than four months later there is still widespread debate about its effectiveness.   

Ease of use and customer awareness appear to be the two major concerns, while an overall lack of data (discussion took place pre-Q1 2021 data release) is also undermining confidence that the much-heralded reforms are achieving what they were set out to. 

This was the verdict of a panel of experts speaking at the Exclusive Motor Claims Conference, an ILC event which took place at Landing FortyTwo in London on Thursday 7 October. 

The panel, comprising Faye Fishlock, head of defendant services, Carpenters Group; Samantha Ramen, director, Keoghs LLP; Matthew Maxwell Scott, executive director, ACSO; and Mark Shepherd, assistant director, head of General Insurance, ABI, were discussing Part One of the reforms, which tackles personal injury compensation and is intended to reduce motor insurance premiums by reducing fraud and limiting payouts. Part Two will address credit hire and rehabilitation but its introduction timeline is still unsure. 

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Faye said, “There is not the volume in the market so it’s too early to tell if they’re working. We need to wait.” 

Samantha agreed, “It takes time to see what’s coming through so we can’t say what this will look like, but we would have expected more medical reports by now.” 

Matthew though, was more forthright. He said, “We thought by now we’d know a lot more but it’s not too early to say it’s been something of a disastrous start operationally, and I think the data will reveal one of three things: one is that there are vanishingly few claims; two is that it’s not a happy experience for anyone; and three is the government saying it’s been a successful launch without being able to prove it.” 

However, Mark Shepherd, assistant director, head of General Insurance, ABI, remains optimistic.  

He said, “I’d be more positive about where we are now compared to four or five years ago. The ABI represents carriers and has been a strong advocate for reforms that will take cost out of the system, and I think we’ve achieved a lot of what we set out to.  

“We’ve got the tariffs for whiplash, we’ve got the small claims limit rising from £1,000 to £5,000 so there is a lot more cost-free claims handling, and you’ve got people able to take their personal injury claims through on a digital portal.  

“We can talk about numbers, but we know it does work and the next stage is increasing numbers. I don’t see this as the end of the reform process, we’re now in the implementation phase, but legislation changes have helped bring about the basis for a better process.”  

Unintended consequences 

However, all significant change brings unintended consequences. While these reforms tackle payouts for whiplash, there is some evidence already of a rise in claims for additional injuries and more claims than previously citing ‘exceptional circumstances’, which can also inflate the compensation package. 

But Matthew is unconvinced. He said, “We have to be careful because the implication is that consumers are exaggerating and making things up. That’s not true or fair. There are compulsory medical checks to stop that happening. Also, hybrid injuries, or secondary injuries after whiplash, were very common before the reforms. On the eve of the reforms about one in three claims cited a hybrid injury so we need to measure it against this figure.” 

Part Two 

But while it may be too soon to gauge the real impact of these reforms, it may also be true that their success or otherwise will be intrinsically linked to Part Two. However, the indications are that the industry will have a long wait before they are ready. 

The time lag between consultation and implementation of Part One was four and half years. The results of Part Two’s consultation are not yet available, and because so much time has passed it may well be that they are out of date now anyway and new consultation period will be necessary. 

Mark said, “I think we’re likely to see a period of consolidation now. I don’t see the political will to embark on another period of fundamental change. We’re likely to see fixes and improvements to Part One before we think about Part Two.”  

What that means for the customer remains to be seen. Premiums are now at a five-year low but that doesn’t mean they will continue on that trajectory. The pandemic has played a significant role in that, while some insurers passed on the anticipated cost savings of the Whiplash Reforms even before they were announced, meaning they have little room for manoeuvre now. 

Mark concluded, “We don’t know whether further savings will be realised or whether costs will be displaced elsewhere. You have a sector that is naturally risk-averse, so they will want to see the benefits first.”  

The inaugural ILC Exclusive Motor Claims Conference was supported by headline sponsor Enterprise Rent-a-Car; sponsors eBay, Solera Audatex and Synetiq; as well as corporate partners AkzoNobel, Autoglass, CAPS, Carpenters Group, Copart, Davies Group, e2e Total Loss Vehicle Management, Entegral, Enterprise Rent-A-Car, GT Motive, Hills Green Parts Specialists, IAA, Innovation Group, S&G Response, Sherwin-Williams Automotive Finishes, ThingCo and Verisk.