Millions of motorists could see their car insurance premiums reduced as a result of plans to cut compensation for whiplash injuries.
Whiplash claims have risen by 50% over the last decade, costing insurance companies about £1bn a year.
The government said insurers have pledged to pass on the savings, worth about £40 a year.
Following a promise made last year, ministers are looking at scrapping the right to compensation or capping it.
In its consultation, the Ministry of Justice suggests that such payments – which are separate from medical bills or loss of earnings – could be banned.
Other proposed measures include:
- Introducing a tariff system for compensation, payable for more significant injuries than whiplash
- Allowing small claims courts to handle all personal injury claims up to £5,000, rather than just £1,000, so reducing legal costs
- Requiring medical reports from an accredited expert, before any claims could be paid
The Association of British Insurers (ABI) welcomed the consultation.
“These reforms are important. They will help to give honest motorists a better deal,” said an ABI spokesperson.