Insurance giants are hoping to see the back of "easy payday" whiplash claims after the Government unveiled new rules aimed at deterring fraudsters.
Insurers have been pushing for a Government crackdown on so-called "crash for cash" scams for years amid a sharp rise in personal injury claims, which cost UK motorists an estimated £1bn every year.
The industry was finally granted that wish on Tuesday, when the Ministry of Justice (MoJ) pledged to change the way whiplash claims are handled by setting fixed compensation amounts for claims and banning the practice of settling cases without medical proof.
The recent surge in claims – which have risen 50pc in a decade despite a fall in the number of road accidents – reflects Britain’s wider compensation culture, Justice Secretary David Gauke said. Cracking down on scammers looking for "an easy payday" will allow insurers to cut premiums and save drivers around £35 a year, he added.
Mr Gauke also indicated that changes to the rate used to calculate personal injury payouts might work in the industry’s favour. The sector was furious about the UK’s decision to cut the so-called Ogden rate from 2.5pc to -0.75pc last year, but PwC said the rate now looks set to rise to 0pc or more.
The bosses of 26 insurance companies representing 86pc of the UK motor industry, including Aviva, Axa, Admiral, eSure and Direct Line, sent a letter to Mr Gauke on Tuesday welcoming his suggested changes and promising to pass on any savings to UK motorists.
"We wish to see premiums return to a more affordable level, supporting millions of motorists and small business owners," the letter read.
Rob Townend, who runs Aviva’s UK general insurance, said the measures "signal the end of the era of crash for cash and nuisance calls".
Huw Evans, boss of the Association of British Insurers (ABI), said the changes would be "great news for motorists" as people and businesses are paying more for motor insurance than ever before.
Steve Treloar, who runs LV General Insurance, added that there was "finally some light at the end of the tunnel" after months of bad news for drivers.