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March 20 (Reuters) - Britain plans new laws to cut thenumber of whiplash claims from car accidents and change thecalculation of personal injury payments, a move which shouldlower costs for insurers and motor premiums for drivers.

Whiplash is a form of neck injury caused by a sudden joltthat snaps the head backwards but insurers argue that manyclaims in such cases are fraudulent.

Britain's Ministry of Justice said it would set fixedcompensation amounts for whiplash claims and require medicalevidence before claims are settled.

It is also changing the interest rate used to calculate howmuch in compensation should be paid by insurers for personalinjuries, cutting the size of payments.

The new legislation "will ensure people in England and Walesreceive fair compensation while reducing excess costs in thesystem", said Huw Evans, director general of the Association ofBritish Insurers, an industry lobby."In a competitive market, such cost benefits get passedthrough to customers..."

Companies such as Admiral, Direct Line andesure and Hastings provide motor insurance ina crowded sector.

However, Brett Dixon, president of the Association ofPersonal Injury Lawyers said the new laws meant "people withcatastrophic injury claims will almost certainly return to asituation where their compensation will not meet their needs".

An outcry from insurers last year led to a governmentconsultation on how the personal injury rate is calculated.

Mohammad Khan, general insurance leader at PwC, said theproposed change to the personal injury rate "should help reduceannual motor insurance premiums for young drivers by an averageof at least 200 pounds ($280) and for the average driver by atleast a further 50 pounds," he added.

The government said it would save motorists around 35pounds.

The average premium paid for motor insurance in Britainjumped 9 percent in 2017 to the highest level since 2012, theABI said.($1 = 0.7129 pounds)

(Reporting by Noor Zainab Hussain in Bengaluru and Carolyn Cohnin LondonEditing by Keith Weir)