Published Civil Liability Bill promises whiplash reforms and personal injury discount rate changes


The government has further clamped down on the so-called ‘compensation culture’ with the introduction of the Civil Liability Bill, which promises to finally reform whiplash claims and change how the personal injury discount rate is calculated.

Announced today by the justice secretary, David Gauke (pictured), the Civil Liability Bill will set fixed amounts of compensation for whiplash claims and ban the practice of seeking or offering to settle whiplash claims without medical evidence.

The Civil Liability Bill also includes changes to the way the personal injury discount rate is set, moving it from index-linked gilts as a proxy for the returns that can be expected from a very low risk investment strategy, to low-risk diversified portfolios.

Gauke said of the introduction of the Civil Liability Bill: “The number of whiplash claims has been too high for too long, and is symptomatic of a wider compensation culture.”

“We are putting this right through this important legislation, ensuring whiplash claims are no longer an easy payday and that money can be put back in the pockets of millions of law-abiding motorists.”

The government claims that the Civil Liability Bill will save motorists about £35 per year, with the insurance industry promising to pass cost savings from whiplash and discount rate reform on to customers.

Huw Evans, director general of the Association of British Insurers, said: “If passed, these proposals would be great news for motorists. People and businesses are paying more for their motor insurance than ever before and we need changes to the law to tackle some of the root causes. Soft tissue injury claims have been rising year on year since 2014 as cold calling claims firms have thrived, driving up the cost of insurance.

“This bill will ensure people in England and Wales receive fair compensation while reducing excess costs in the system. In a competitive market such cost benefits get passed through to customers, as they did after previous reforms in 2012 when average motor premiums fell by £50 over the next two years.

“The sensible new framework proposed for the personal injury discount rate would also deliver a system that is fair for customers, claimants and taxpayers. It is now important that Parliament agrees these proposals swiftly so people across England and Wales can start to see the benefits.”

The whiplash reforms, made up of the Civil Liability Bill and secondary legislation, will introduce a compensation limit of up to £5,000 for claims, as well as the ban on settlements without medical reports.

A £5,000 limit on road traffic accident claims and £2,000 for all other personal injury claims, as well as a fixed tariff system for soft tissue injury, will be introduced via secondary legislation. The government is aiming to roll out its whiplash reforms by 2019.

Changes to the personal injury discount rate have proven particularly controversial.

In February 2017, the personal injury discount rate was reduced from 2.5% to -0.75%, dramatically increasing the size of awards of damages to individuals.

A consultation followed, and a Justice Select Committee report urged the government to clarify its aims, gather proper evidence about how claimants invest lump-sum damages and whether investment covers their future losses, and ensure adequate safeguards to prevent under-compensation of the most vulnerable claimants.

On top of setting the personal injury discount rate with reference to ‘low risk’ rather than ‘very low risk’ investments, the Civil Liability Bill will establish a regular review of the rate, the first within 90 days of the legislation coming into force and at least every three years thereafter.

It will also establish an independent expert panel chaired by the government actuary to advise the lord chancellor on the setting of the rate.


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Mark Dugdale is the editor of Claims Media. Mark welcomes articles, letters or feedback from readers and can be reached via