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Banning of whiplash injury cash payouts

Posted in: Neck Injuries Road Traffic Accidents Whiplash Injuries 

A recent statement has announced government plans to end right to cash compensation for whiplash claims. Where whiplash claims alone cost the insurance industry £2bn a year, an average of £90 a policy, the government has come up with a plan to bring car insurance bills down by as much as £50. They have proposed the banning of cash payouts for whiplash claims.

George Osborne put forward the idea of ending the right to cash for minor whiplash injuries in the autumn statement. He said that this would prevent responsible motorists from having to pay ridiculously high premiums to cover false claims by others. He added: “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-£50 per motor insurance policy on to consumers.

Clogging of small claims courts?

Figures revealed that the average motor insurance premium in 2014 was £372, so a £50 cut would be equal to a 13% decrease in cost. Despite the advantages of this change, however, there are worries that the small claims courts would become clogged with whiplash cases as a result. There are also questions being asked about how much this change would in fact benefit drivers. Accountants EY predicted last week that motorists faced an 8% surge in insurance costs next year – with many insurance firms currently unprofitable.

Discussions continue.

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