Millions of motorists could see their car insurance bills cut by up to &40 a year, after the government recently announce plans to toughen up and crackdown on fraudulent whiplash claims.

Despite a decrease in the number of car accidents, whiplash claims are 50% higher than they were a decade ago with one whiplash claim being paid out every 60 seconds. The Ministry of Justice (MoJ) described the situation as Britain being in the grip of an “epidemic of whiplash claims”. This high number of bogus claims pushes up insurance costs for honest motorists, but as a result of a clampdown, motorists could see their premiums reduced by &40 a year.

The consultation being carried out by The MoJ runs up until January 6 2017. The MoJ proposals would make obtaining a payout much harder and, according to insurers, will end the UK’s status as the whiplash capital of the world. The proposals are intended to stamp out the fraudsters and the “toxic” compensation culture that has forced insurance premiums up, led to consumers being harassed with nuisance texts and calls, and put additional pressure on our NHS.

The consultation could lead to scrapping the right to compensation all together or putting a strict cap on the amount people can claim. Putting a cap on compensation would push payouts for minor whiplash claims down from an average of &1,850 to a maximum of &425.

Justice Secretary Liz Truss said: "For too long, some have exploited a rampant compensation culture and seen whiplash claims an easy payday, driving up costs for millions of law-abiding motorists.

"These reforms will crack down on minor, exaggerated and fraudulent claims."

Reforms to the whiplash rules were first announced in last year’s Autumn Statement by former chancellor George Osborne but it has taken almost a year for the government to launch this consultation.

The industry has promised to pass savings from the latest reforms on to policyholders.