Government response needs fleshing out, argue critics ahead of next insurance industry meeting with government

The government is under pressure to explain how it will slash the number and cost of whiplash claims, following its tepid response this week to the Transport Select Committee (TSC)’s report on motor insurance.

The response comes ahead of a crucial meeting between transport secretary Justine Greening, insurer bosses and Biba on 2 May to discuss the possibility of slashing lawyers’ fees paid through the road traffic accident portal.

The TSC made several recommendations in a report in March last year on how to tackle fraudulent whiplash claims and the rising cost of motor insurance, but the Department for Transport (DfT) has only just responded to the report, and critics say it is light on detail.

Biba chief executive Eric Galbraith called on the government to speed things up. “We broadly welcome the government’s response and will continue to work closely with them,” he said.

“However, we want them to speed up their work to reduce fraudulent whiplash claims and urge them to provide more details and timescales to move this forward.”

TSC chair Louise Ellman MP said she was “encouraged” by the government’s willingness to tackle fraudulent whiplash claims, but added that these good intentions should be acted on.

The report’s recommendations, and the DfT’s responses, included:

  • If the Legal Aid Bill fails to reduce whiplash claims, the committee recommended legislation requiring claimants to show objective evidence of whiplash. The DfT said it was still considering what to do.
  • On referral fees, the TSC recommended extending the ban beyond lawyers, to garages and credit hire firms for example. The DfT said it would consider the results of an Office of Fair Trading study that covers referral fees paid to credit hire firms and garages.
  • The TSC recommended a probe into cold-calling for personal injury claims, leading to a potential crackdown through legislation or by the regulators. The DfT said adequate regulation and legislation already existed.
  • The committee called for an updated timetable on the project for insurers to electronically link up to the DVLA database. The DfT responded that the project could be up and running by early 2014.

The DfT responses will provide a talking point ahead of the 2 May meeting, which is a follow-up to the Downing Street summit with insurer bosses in February.

Insurers and Biba are expected to strongly argue for a cut in lawyers’ fees paid through the RTA portal, something that prime minister David Cameron is believed to have backed at the February meeting, at which Biba was not present.