Motorists are unlikely to benefit from the action to reduce whiplash claims until 2018, if at all, according to a report.
Car insurance prices are likely to rise next year for the third consecutive year, it predicts.
Motorists will end this year having paid £33 more for their cover on average, representing an 8 per cent increase on the previous year. Next year they are expected to pay an extra £13, according to the consultancy firm EY.
High claims inflation and the increase in insurance premium tax were behind the increase, the company said.
The report noted that a tougher line on whiplash claims, which account for about a quarter of insurance payouts’ cost, should help to reduce prices from 2018 but the industry had an underlying profitability problem.
It said that insurers had not made an underwriting profit for the second year running, and that costs were likely to continue to rise next year. This raises questions about whether the industry will pass on savings from planned action against whiplash claims. announced by the government last week.
The Ministry of Justice said it would either cap cash payouts for whiplash or ban them altogether to tame a “predatory” claims industry that was driving up the cost of insurance. The plans are out for consultation until January.