Mahmood: Now to consult with Lady Chief Justice
The whiplash tariff is set to increase by around 15%, the government announced yesterday, reflecting inflation since it was introduced in 2021 and including a ‘buffer’ to take account of predicted inflation until the next review in 2027.
Claimant representatives say the rise is not enough, while compensators and their lawyers argued for no increase at all.
Lord Chancellor Shabana Mahmood finally published the first statutory review of the Whiplash Injury Regulations 2021, which her Conservative predecessor Alex Chalk was due to publish in late May, only to be thwarted by the general election being called.
Ms Mahmood decided to make no other changes to the regulations – the split structure of the tariff (whiplash only and whiplash plus minor psychological injury), the uplift of up to 20% that judges can make for exceptional injuries or circumstances, and the definitions on what constitutes appropriate medical evidence and who may provide it.
The review was explicitly not an evaluation of whether the whiplash reforms have delivered on the policy intention.
“A separate post-implementation review of the reforms will be completed in due course, following the completion of this review and the implementation of its outcomes,” it said.
The review found no evidence that claimants were systematically increasing the prognosis period for their whiplash injuries to move into higher bands on the tariff, with MedCo data from 2019/20 and 2023/24 showing little change in the distribution of injuries between the three-month bands.
The Ministry of Justice’s (MoJ) call for evidence on the regulations, which attracted 32 responses, highlighted disagreement around the definition of minor psychological injury, leading to an increase in secondary medical reports to assess psychological injuries.
The MoJ said it would provide additional guidance on defining ‘minor psychological injury’, noting that the Judicial College Guidelines (JCG) stated that “a minor injury is usually one which lasts for no more than three months and that a psychological injury such as travel anxiety may be considered as minor even if it lasts longer than three months”.
As such, the MoJ said, “a second report would normally only need to be sourced if there is a more significant diagnosable psychiatric injury or post-traumatic stress disorder”.
Compensators and defendant lawyers opposed increasing the tariff, arguing that it would “likely result in higher motor premiums”, the review said; claimant-focused respondents said inflation and cost-of-living pressures should result in an above-inflation increase.
The review said: “A balance must be maintained to protect Parliament’s intention of ensuring claimants receive appropriate compensation. The compensator’s suggestion would likely result in under-compensation and the claimant’s alternative risks over-compensation.”
Several respondents pointed the recently published 17th update of the JCG, which settled on an inflationary increase to the awards of around 22%, using the retail prices index.
But the review noted that the Office of National Statistics said this index risked overstating inflation and it now recommended using the consumer prices index.
Compensators argued that any increase to the tariff when coupled with the JCG rise for non-tariff injuries would result in a significant number of claims being revalued above £5,000 and so move into the fast-track. They said the small claims track limit should be increased to match.
This was beyond the scope of the review but the MoJ said an initial analysis suggested that less than 5% of claims using the Official Injury Claim (OIC) portal would be valued above the small claims limit under the new tariff – although officials would monitor settlement data for this.
Data showed that claimants settling in the OIC received an average of £778 for tariff claims and £1,055 for non-tariff injuries in 2023/24. The figures for a sample of 100 cases that went to court were £662 and £1,566 respectively.
The latter figure likely reflected the fact that the greater complexity of the injuries made the cases harder to settle and/or contained more injuries and so were of higher value, the review said.
“This data is indicative that those settling pre-court via the OIC are not losing out financially in terms of damages received for pain, suffering and loss of amenity.
“Additionally, where their claims involve whiplash-only injuries, the OIC system is enabling effective and proportionate settlements to be made for both represented and unrepresented claimants.”
On the ‘buffer’ for future inflation, the MoJ rejected claimant representatives’ call for an annual review instead, which “could lead to a cycle of delayed compensation as claimants are advised to wait to settle to benefit from an annual increase”, and also compensators’ call for no buffer at all.
“Claimants should be given the protection that the buffer provides, and three years is the appropriate length of time. In addition, the difference in tariff levels using the buffer is not so great as to risk significantly risk the objectives behind the reforms.”
As required by the Civil Liability Act 2018, Ms Mahmood now has to consult the Lady Chief Justice on her decisions, which should take around eight weeks. Secondary legislation to increase the tariff will then be laid and debated in both Houses of Parliament under the affirmative resolution procedure “as soon as parliamentary time allows”.
Kim Harrison, president of the Association of Personal Injury Lawyers, said 15% was “not enough” and would leave injured people receiving “less compensation in real terms than they did in 2021”.
She continued: “If the Lord Chancellor were simply to increase the actual tariff, as introduced, in line with inflation using the consumer price index, rather than making convoluted predictions about future inflation, the increase to damages in the tariff would be 22%.
“Increases in inflation have been eroding injured people’s damages since the tariff was introduced, a tariff which was set at an insulting, arbitrary level to begin with. The outcome of this review has made an unjust situation even worse.”
Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations, urged the MoJ to put the regulations before Parliament as soon as possible.
“We also still don’t know whether the whiplash reforms have led to any of the promised savings for motorists, and so eagerly await the Financial Conduct Authority report on this,” he added. “In the meantime, and given record average premiums, the only winner seems to be the insurance industry.”
Sue Brown, chair of the Motor Accident Solicitors Society, said “any increase, however modest, in the tariff will be welcomed by motor accident victims and claimant legal representatives”. But as the tariff was set too low from the start, under-compensation would continue.
Andrew Wild, head of legal practice at First4InjuryClaims, added: “New government, same old outcome. Accident victims have, and will, continue to be short-changed as a result of this latest review, which does not reflect the unprecedented hike in inflation.”
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