Britain to put brake on whiplash injury claims from car crashes

March 20 (Reuters) - Britain plans new laws to cut the number of whiplash claims from car accidents and change the calculation of personal injury payments, a move which should lower costs for insurers and motor premiums for drivers.

Whiplash is a form of neck injury caused by a sudden jolt that snaps the head backwards but insurers argue that many claims in such cases are fraudulent.

Britain’s Ministry of Justice said it would set fixed compensation amounts for whiplash claims and require medical evidence before claims are settled.

It is also changing the interest rate used to calculate how much in compensation should be paid by insurers for personal injuries, cutting the size of payments.

The new legislation “will ensure people in England and Wales receive fair compensation while reducing excess costs in the system”, said Huw Evans, director general of the Association of British Insurers, an industry lobby. “In a competitive market, such cost benefits get passed through to customers...”

Companies such as Admiral, Direct Line and esure and Hastings provide motor insurance in a crowded sector.

However, Brett Dixon, president of the Association of Personal Injury Lawyers said the new laws meant “people with catastrophic injury claims will almost certainly return to a situation where their compensation will not meet their needs”.

An outcry from insurers last year led to a government consultation on how the personal injury rate is calculated.

Mohammad Khan, general insurance leader at PwC, said the proposed change to the personal injury rate “should help reduce annual motor insurance premiums for young drivers by an average of at least 200 pounds ($280) and for the average driver by at least a further 50 pounds,” he added.

The government said it would save motorists around 35 pounds.

The average premium paid for motor insurance in Britain jumped 9 percent in 2017 to the highest level since 2012, the ABI said. ($1 = 0.7129 pounds)

Reporting by Noor Zainab Hussain in Bengaluru and Carolyn Cohn in London Editing by Keith Weir