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News that the government is considering making further reforms to the whiplash claims industry has drivers excited with the prospect that they could be about to experience a windfall in their insurance premium rates. The last time the government introduced changes in this area, premiums dropped by between 25% and 30%, although analysts say that because most insurance companies were forced to take a financial hit after over estimating the financial benefit that they would receive, they will be less inclined to offer any reduction, until they have seen a reduction in the costs that they are faced with.

However, the chancellor has said that he expects the average driver to see their annual premium to drop by around £50, and that the changes should save approximately £1bn a year for the insurance industry, which is said to face £2bn a year charges from whiplash claims.

Previous changes saw the abolition of referral fees for whiplash cases, and the new round of proposed reforms would mean that considerably more cases would be dealt with by the small claims court. The maximum compensation that could be awarded by the small claims court would increase from £1,000 to £5,000, and additional changes mean that cash compensation could be scrapped altogether for minor claims, which most whiplash claims tend to be.

Chancellor George Osborne has said that the changes would help further reduce the burden on the insurance industry which is forced to pay £2bn a year in costs for this type of case, but that he expects insurers to pass cost savings on to customers, so that drivers should witness an average £50 reduction in their annual insurance premium.

Whiplash can be a debilitating injury, but it is also difficult to prove or disprove because it is effectively a soft tissue injury. As a result, experts believe that the majority of these claims are fraudulent or exaggerated, and the excessively high number of whiplash claims that are submitted in the UK has earned the country the reputation of being the whiplash capital of the world.