On 12 December Justice Secretary Chris Grayling unveiled plans to tackle the 'huge number' of whiplash claims which it is claimed have been pushing up insurance costs.
A consultation was launched on new measures to bring down the number and cost of whiplash claims, including speculative and fraudulent applications. According to the MoJ, there were more than half a million whiplash claims last year; insurers estimate they add £90 a year to the average motor insurance policy.
The proposals under consultation include:
• Creating new independent medical panels to improve diagnosis of whiplash injuries. This will ensure that genuine claims can still go ahead, but exaggerated, misrepresented or fraudulent claims are robustly challenged.
• Options to allow more whiplash cases to be challenged in the small claims court, including raising the track threshold from £1,000 to £5,000.
Justice Secretary Chris Grayling said: "For too long honest drivers have been bearing the price of a system that has been open to abuse and it is time for that to change.
"We are proposing action to support effective whiplash diagnosis by medical experts and to simplify procedures which will help bring speculative or fraudulent claims before a judge – so genuine claims can still be settled but fraudsters are left in no doubt there will be no more easy pay days."
The changes are designed to tackle the excessive legal costs which too often mean it is cheaper for insurers to settle whiplash claims even if they suspect they are bogus – leading to higher premiums for all motorists.
The proposals were attacked by Shadow Justice Secretary Andy Slaughter, who claimed they would limit access to justice for injured parties.
He said: "The Government is using whiplash as a front for further restrictions in the provision of legal advice in road traffic accident claims, including ones which are medically and legally complex and serious. It is odd that the Government itself rejected raising the small claims limit for personal injury to £5,000 earlier this year, as have all previous reviews over the last 15 years, yet have now backtracked on this less than twelve months later.
"The outcome of this will be that victims will not have access to legal advice and will rely entirely on the insurance industry either to make them a low offer or sell them expensive legal insurance. This risks being a windfall for insurers but at no stage have consumers been given any indication that their car insurance premiums will fall."
Karl Tonks, president of the Association of Personal Injury Lawyers (APIL) also attacked the proposals.
"The small claims court is designed for people to represent themselves, which may well work in disputes about faulty goods and services," he said, "but it won't help the hundreds of thousands of people who have serious and genuine injuries following road accidents."
"On top of that, even to begin to make a claim the claimant needs to be able to put a value on the nature of his injuries, but independent research has found that, in the case of a whiplash injury, for example, 70% of people would not know how much to claim.
"Defendants and their insurance companies, on the other hand, will know exactly how much a claim is worth and it is the duty of insurance companies to look after their shareholders, not injured people. Getting fair and just compensation really will be an uphill battle; many people will be put off from even trying."
The consultation runs until 8 March.