The whiplash reforms were, along with changes to the way the personal injury discount rate (PIDR) is set, introduced by the Civil Liability Act 2018. At the same time, a dedicated Pre-Action Protocol and an electronic platform – the Official Injury Claims service – were also put in place. As we noted in a recent article last week, the Act requires HM Treasury to publish a report, by 1 April 2025, about its financial effects. We’ll refer to this as the ‘savings’ report. It was published on 27 March.

The Treasury’s savings report The Civil Liability Act’s effect on motor insurance policyholders (HTML) - GOV.UK is brief, to say the least. Any observers expecting granular detail about the separate effects of the reduction in damages, the loss of costs recovery due to the increase in the small claims limit, and the changes (in 2019) to the PIDR will need to look elsewhere. Of the ten page report, there are really only five of content, two of which contain a single paragraph of text.

Three tables summarise the aggregate effects of the reforms over a three year period. The Treasury’s key findings, based on data provided by insurers, and comparing counterfactual position if the reforms had not been implemented, are that

  • gross claims costs are up to £200 lower
  • gross premiums are up to £500m lower, and
  • premiums have been reduced by up to £15 per policy

The first two are clearly significant sums, although they fall rather short of the original impact assessment’s statement that “Motor policy holders will gain a net benefit of around £1.2bn per annum.”  The third also falls short of the £35 per policy saving that featured in the subheading of this Ministry of Justice press release marking the introduction of the reforms: Over £1 billion savings for motorists as whiplash reforms come into force - GOV.UK

The figure of £35 has gained a surprising degree of permanence since it first appeared four years ago and may have become a benchmark expectation. If so, then the industry’s messaging will need to address the difference between it and the £15 figure in the new report. And, as we pointed out last week, with revised whiplash injury tariff regulations due to debated in Parliament in the coming weeks, there will inevitably be renewed political interest in the reforms and in what appears to be a divergence in reported versus expected savings for motorists and constituents.

[The £35 figure from the MoJ press release in 2021 does not actually appear in the formal impact assessment and published with the legislation and its origin is difficult to source. In rounds terms it is fairly close to the estimated headline savings of £1.2bn divided by the number of private cars in use at the end of 2020, but this may be a coincidence.]