A new online portal is available for road traffic-related personal injury claims under £5,000, including whiplash.
This means claimants can settle their own claim for accidents happening on May 31 or after without the use of a lawyer if they wish, sparing legal costs.
It is anticipated that the majority of road traffic accident claims will use the portal in future.
There is also a ban on settling whiplash cases without medical evidence – a practice which has opened the door to fraudulent or exaggerated claims.
Claims for whiplash and other road traffic accident injuries feed into the costs of the motor insurance policies that everyone pays.
The Ministry of Justice (MoJ) said the move could slash around £35 off a typical car insurance premium per year.
It said the changes are designed to reduce the “unacceptably high” number of whiplash claims made each year, with more than 550,000 in 2019/20 alone.
Despite fewer crashes reported year-on-year since 2013, road traffic accident claims are more than 40% higher than in 2006, the MoJ said, pushing up the costs of premiums for ordinary motorists.
Insurers have pledged to pass on the savings that these reforms will create to drivers, worth a total of £1.2 billion, it added.
Lord Chancellor Robert Buckland said: “For too long the system for making whiplash claims has been open to abuse by individuals looking for an easy payday – with ordinary motorists paying the price.
“Our changes, which come into force today, will put an end to this greedy opportunism and ultimately see savings put back into the pockets of the country’s drivers.”
Dominic Clayden, chief executive of Motor Insurers’ Bureau (MIB) which operates the new Official Injury Claim (OIC) online claims portal, said: “We are pleased to have delivered on our remit to build a service that meets the requirements of these important policy changes.
“MIB’s focus has always been about making sure the new legal process is as easy and straightforward as possible for anyone who might need to make a claim.
“To make sure the service works well for everyone we will continue our work with the Ministry of Justice to listen to feedback and to make further enhancements.”
Steve Gooding, director of the RAC Foundation, said: “There are almost as many lurid headlines about whiplash claims as there are claims themselves.
“This new system should mean legitimate cases are easier and quicker to deal with, fraudulent claims are more likely to fail and all drivers benefit from decreases in their insurance premiums.”
Dave Lovely from insurance giant Aviva said: “These reforms are critical in creating a fairer system that balances care and compensation for genuine injuries caused by motor accidents, while removing excess costs.
“Through the new OIC portal, which has been supported by the insurance industry, motorists can more easily manage their claims without legal help, including obtaining medical reports and receiving compensation payments.
“For the insurance industry, the new law allows us to focus on those people with genuine injuries and claims to ensure we help them when they need us most. This is a powerful example of the insurance industry working for the benefit of its customers, and Aviva stands by its promise to pass on 100% of the savings we see from the reforms to our customers.”
Aviva added that, more widely, the reforms would effectively end the “no win, no fee” incentive behind many minor motor injury claims that encouraged some claimants to “have a go”.
This will remove legal costs from many minor, straightforward claims, and should also reduce the number of nuisance calls and texts chasing injury claims, it added.
James Dalton, director, general insurance policy, the Association of British Insurers (ABI) said: “This long-awaited reform is a big win for consumers. The portal and associated reforms will help control the costs associated with whiplash claims, whilst ensuring proportionate compensation is paid to genuinely injured claimants.
“The ABI has been working with the Government over a number of years on much-needed reforms to the UK’s personal injury system, and this portal is a key development to ensure a compensation system that has genuine claimants at its heart, while cracking down on those who look to exploit the system.”