A surprise attack on whiplash claims was launched last year, when Jack Straw denounced referral fees as a "racket" at the root of a phenomenal growth in the number and value of claims for personal injury. Representing 80% of all claims he said, whiplash is the perfect vehicle for claims management companies to maximise income from referral fees: "a soft-tissue injury that no scan or X-ray can pick up, so that claims rely on the patient's description."

He was highlighting one of the major problems with whiplash claims – their value as a commodity.

What has happened since then?

There has been action on two fronts to tackle the issue.

The funding reforms contained in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 - including the ban on referral fees, the ending of recoverability of success fees and after the event insurance - together with the confirmed increase of the threshold for RTA portal claims to £25,000 are aimed firmly at reducing both the amount of litigation and costs.

The Transport Select Committee also reopened its investigation into the rising cost of motor insurance. Its findings resulted in the Government committing itself to reducing the cost and number of whiplash claims. The then Justice Minister Jonathan Djanogly announced a forthcoming consultation on the use of independent medical panels to tackle "questionable medical evidence" and an increase to the small claims threshold in personal injury so that more claims can be dealt with at lower cost.

What next?

We await the consultation and will consider it in more detail as soon as it is published. On 10 September 2012 the following announcement was made

"The Government will shortly publish a consultation document on the introduction of independent medical panels and on whether to amend the small claims threshold for damages for personal injury claims. The consultation document and its related impact assessments will be available to download from the Ministry of Justice website following publication.

The Government is committed to finding ways of tackling fraudulent and exaggerated whiplash claims, while ensuring that people who have suffered a genuine neck injury can continue to get appropriate compensation. Contributions and evidence from stakeholders will be sought on ways to reduce the number and costs of whiplash claims, and on the potential impacts of these proposals on affected groups."

In the meantime, even the Leveson Inquiry touches on the issue of whiplash claims. The Transport Committee invited the Government to send a clear message to the insurance industry that the data protection legislation must be fully respected and it supports a Justice Committee recommendation for stricter penalties for breaching the Data Protection Act 2008. The Government proposes to await the outcome of the Leveson Inquiry before considering the issue further.

Will it be enough?

Whilst these measures may well reduce the costs incurred in handling whiplash claims, will they actually address claims frequency?

The LASPO funding reforms ought to have an impact and may well deter some opportunistic claims but the problem is that whiplash has become the fraud of choice being notoriously difficult to disprove given the lack of objective clinical signs. It remains to be seen whether the 'independent medical panels' that the Government has mooted will be any better placed to detect fabricated symptoms, particularly from claimants who have been coached in advance of any medical examination as to what to say.

The Government has indicated it is looking at tougher guidance on diagnosis – but admits this is not straightforward.

Do we need something radical? For example, the ABI has suggested withholding compensation for whiplash until there is objective evidence, but what exactly does that mean in practice?

The Government is encouraging insurers to defend whiplash claims more vigorously. What about QOCS – will that encourage a more vigorous defence of claims? Much will depend upon the final wording of the reforms and whether the exceptions to the QOCS regime, such as fraud will offer sufficient practical incentive to invest in challenging low value claims.

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