Whiplash Tariff Update Announced

Following a delay occasioned by the calling of the General Election earlier this year, the Government yesterday published its response to the report on the statutory review of the whiplash tariff.

The Lord Chancellor has decided that the tariff should increase by around 14-15% across the board.  In calculating this she:

• Stripped out the "buffer" that had been added to the tariff in 2021;
• Applied an uplift based on CPI since 2021; and
• Added a three year buffer based on CPI forecasts to 2027.

The Lord Chancellor must now consult with the Lady Chief Justice, a process that she says will take around eight weeks. The outcomes of that consultation will be communicated before revised Regulations being laid before Parliament.

The revised Regulations will apply to accidents on or after the commencement date. Once laid before Parliament, the Regulations need to be debated in both Houses under the Affirmative Resolution procedure and this will happen "as soon as Parliamentary time allows".

For now it is not clear exactly when the new tariff will apply, safe to say it is unlikely to be before the end of Q1 2025.

The Lord Chancellor has decided that the structure of the tariff will remain as it is and that the uplift for exceptional circumstances should remain capped at 20%.

Insurers had argued that the small claims track should be increased in line with the increases in the tariff. The Lord Chancellor saw some logic in the argument but said that "caution is needed when considering acting without regard to all the appropriate data". Ministry of Justice officials will continue to monitor the settlement data and should it become clear that significant numbers of claims are impacted, the Lord Chancellor will consider whether further action is required. We will work with our clients on ensuring that relevant data is kept under review.

The Lord Chancellor also addressed the issue of minor psychological injuries noting that there is some "disagreement around the definition of minor psychological injury, leading to an increase in secondary medical reports to assess psychological injuries". In making reference to the relevant section of the Judicial College Guidelines (see below) she noted:

"The government’s expectation is that this approach should be applied to minor psychological claims associated with a whiplash injury. As such a second report would normally only need to be sourced if there is a more significant diagnosable psychiatric injury or post-traumatic stress disorder as described in Chapter 4 of the JCG. The minor psychological injuries covered by the tariff should be distinguished from these and officials will consider ways in which further guidance can be provided".

This guidance is helpful in undermining an argument that a report from a psychological expert is justifiable where the psychological injury is minor.

For more information or advice, please contact one of the authors of this article or a member of our Strategic Advisory Team.