Taskforce report hints at extending whiplash tariffs and reviewing small claims limits
The government has indicated that further controls on road traffic accident damages and legal costs may be on the way, following the publication of its motor insurance taskforce report. The taskforce, established in October 2024 to examine the causes of rapidly rising motor premiums, set out a series of actions but stopped short of firm recommendations.
Among the proposals raised by regulators and insurers was the possibility of extending the whiplash tariff to other injury types and revisiting the small claims track limit for RTA personal injury claims. Although the report did not endorse any specific change, it noted that stakeholders had urged the government to consider additional mechanisms to contain claims costs and improve efficiency.
Transport secretary Heidi Alexander and economic secretary to the Treasury Lucy Rigby said the actions outlined formed “a roadmap to real change” and pledged that ministers would begin delivering them in the coming months. Their comments came against a backdrop of sustained increases in motor insurance premiums in recent years.
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The Financial Conduct Authority’s analysis, published earlier this year, informed the taskforce’s work. It showed that higher premiums between 2019 and 2023 largely resulted from claims costs outside insurers’ control. These included the rising expense of repairing modern vehicles, supply chain disruption, shortages of skilled labour, increased credit hire costs, growing theft levels and higher volumes of uninsured driving.
Bodily injury claims remained the largest single contributor to overall claims expenditure, accounting for 32%. However, they increased by only 7% across the period, making them one of the more stable cost drivers. The report also noted limited evidence that some policyholders had benefited from lower premiums following the whiplash reforms. HM Treasury previously estimated that the reforms saved policyholders £31 in premiums in their first 3 years of operation, although initial projections had suggested annual savings of £35.
The taskforce acknowledged proposals from the FCA and insurers that the Ministry of Justice should examine damages for non-whiplash injuries and consider a review of the small claims track limit to reflect inflation and reduce recoverable legal costs. The report noted that the Ministry of Justice has already launched a call for evidence as part of its post-implementation review of the whiplash programme, with findings and any recommendations to follow.
The FCA’s review highlighted that claims management companies could increase the complexity and cost of claims, although insurers reported some benefits from referral arrangements. The regulator recommended that insurers develop a good practice code to limit unnecessary referrals and improve claims handling. The taskforce said this work was underway and that the government would continue engaging with industry and regulators.
Average motor premiums have fallen by £79 year on year across the past 2 years, according to data from the Association of British Insurers, but insurers continue to face high underlying claims costs.