British drivers are each paying £35 a year too much for their car insurance because reforms to compensation payments have been delayed, it has been claimed.
The Government was due to introduce new limits on whiplash claims earlier this year but the changes have now been delayed twice, with the hold-up estimated to have cost UK drivers a combined £1.3 billion.
The Whiplash Reform Programme was initially due to be introduced in April this year but was pushed back to August in light of the coronavirus outbreak. The Ministry of Justice has now said it will not be introduced until August 2021.
The programme is meant to address the high number and cost of claims for whiplash injuries amid concerns of fraud and the impact claims are having on all insurance policies.
It will introduce a fixed tariff of damages for pain, suffering and loss of amenity, set a £5,000 limit on small claims courts awards and ban settling a whiplash claim without a medical report.
Such measures should help reduce insurance premiums by cutting costs for insurers but Compare the Market estimates that the hold-up in implementing them is costing drivers an average of £35 a year.
Dan Hutson, head of motor insurance at Compare the Market, said: “The whiplash reforms were hailed as a great way of reducing excessive motor insurance premiums for motorists. However, the two delays in implementation have meant that car insurance premiums have remained higher than they should be, equating to £1.3 billion in extra costs.”
Announcing the latest delay, Secretary of State for Justice Robert Buckland said: “The Government indicated on 27 February 2020 that after careful consideration it had decided to implement the whiplash reforms in August 2020. However, it is apparent that the current Covid-19 pandemic has had an unprecedented impact on the medical, legal and insurance sectors. While the whiplash reform measures remain important, the government is committed to acting to ease the disruption and pressures caused by the Covid-19 outbreak where it can.
“As a result, the government has considered representations from key stakeholder groups and agrees that now is not the time to press ahead with significant transformational change to the personal injury sector.”