Do not increase small claims limit for whiplash cases, MPs say

MPs on the transport select committee today called on the government not to increase the small claims limit for whiplash cases from £1,000 to £5,000.

The MPs warned in a report that "access to justice is likely to be impaired, particularly for people who do not feel confident to represent themselves" and the impact of the RTA portal should be analysed before deciding whether to proceed.

"We believe that access to justice is likely to be impaired, particularly for people who do not feel confident to represent themselves in what will seem to some to be a complex and intimidating process," they said in their fourth report, 'Cost of motor insurance: whiplash'.

"Insurers will use legal professionals to contest claims, which will add to this problem.

"It would be financially difficult for many solicitors to assist litigants fighting personal injury claims using the small claims procedure, given the limited fees available. However, we are concerned that some claims management firms might find a way to enter the process, fuelling another boom in their activities."

MPs also said that raising the small claims limit could be counterproductive in discouraging fraudulent and exaggerated claims, because the general presumption in small claims procedure was that expert evidence was not submitted.

The committee, chaired by Labour MP Louise Ellman (pictured), said the government's claim that UK was the whiplash capital of the world "cannot be conclusively proved or disproved from international evidence which is available".

MPs said it was "surprising" that the government had brought forward measures to reduce the number of whiplash claims "without giving even an estimate" of the scale of the problem.

"In the debate about how to reduce fraud and exaggeration, genuine claimants should not be demonised simply because their condition cannot be picked up on a scan.

"We welcome the government's commitment to reducing motor insurance premiums, but are surprised that ministers seem only to be listening to the insurers' perspective.

The committee said this was "particularly disappointing" in the light of the government's own observation that the insurers had encouraged excessive and unnecessary claims.

"We were surprised to hear that insurers will sometimes make an offer to personal injury claimants even before a medical report has been received," the MPs went on.

"Although it may make economic sense for an individual insurance firm to settle a claim without medical evidence or to pay out even if fraud or exaggeration is suspected, the industry as a whole is damaged, and motorists pick up the bill in the form of higher premiums.

"Insurers must immediately put their house in order and end practices which encourage fraud and exaggeration. If not, the government should take steps to protect motorists."

APIL chief executive Deborah Evans said that publication of the select committee report meant that realities about the whiplash claims system had finally been recognised.

"The transport select committee has acknowledged that the government has, so far, largely been influenced by the insurance industry in its plans to tackle high motor premiums, and called for insurers to get their house in order. I couldn't agree more.

"Some of the real mischief lies in credit hire and repair practices, which the Office of Fair Trading has described as 'dysfunctional'. And we need to see an end to insurers trying to cheaply pay off crash victims before a medical assessment has been carried out."