Delays on whiplash reform cost British drivers £1.3bn extra in premium payments

Compare the Market calls for changes to help young drivers as postponement adds an average of £35 to premiums.

Tom Harrison
Content writer
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Posted 4 AUGUST 2020

Plans to help prevent people making fraudulent or exaggerated personal injury claims because of whiplash were put on the back burner for the second time and delayed until next year because of coronavirus.

The legislation would have taken around £35 off average premiums. However, the delay has meant that premiums remain higher than they should be.

For young drivers, this effect on wallets is compounded by multiple hikes to the Insurance Premium Tax (IPT) rate. The average motor insurance premium is estimated to be around £75 more expensive because of the tax. But for young people aged 17-24 this increases significantly to £126. This group already pay the highest because they are considered riskier drivers to insure.

Coronavirus hits young drivers hard

Recent research from Compare the Market has found that one in five young people have stopped using their car as they can no longer afford to run it as a result of coronavirus. Young people have been most affected by the economic impacts of the pandemic, with 37% of 17-24-year-olds expecting to be made redundant or have to take a pay cut – the highest of any age group.

Cars can be essential to secure and maintain a job. The research found that over half of young drivers believe that not being able to afford to run their car will negatively impact their ability to get a job, while almost 60% say that it will negatively impact their ability to get to work.

Compare the Market calls for help for young drivers

To help ensure that young people can afford to stay on the road and improve their chances of work, Compare the Market is calling on the Government to support younger motorists by providing an IPT exemption on motor insurance premiums for 17- to 24-year-olds.

“It is essential that action is taken to support motorists who are struggling with the cost of cover. Providing an exemption to IPT for 17- to 24-year-olds would give immediate support to many young people across the UK, reducing their premiums by an average of £126. For those looking to reduce their insurance costs further, switching providers remains the best way to save money,” said Dan Hutson, head of motor insurance at Compare the Market.

Whiplash reforms

The Ministry of Justice has said: “The government remains firmly committed to implementing these measures which are intended to control the number and cost of whiplash claims. Under the Programme, we will increase the small claims track limit for road traffic accident related personal injury claims to £5,000; as well as introduce a fixed tariff of damages for pain, suffering and loss of amenity for whiplash injuries, and a ban on the making or accepting of offers to settle a whiplash claim without a medical report.”

Because of the impact of the Covid-19 pandemic, particularly on the medical, legal and insurance sectors, the government decided to delay the implementation of the whiplash reform programme to April 2021. This means that potential savings will be delayed until its implementation come fully into force.