A new streamlined claims process will halve the time it takes people injured in road accidents to receive compensation.
The changes will see people wait no more than nine months to settle a personal injury claim after an accident, instead of up to two years.
It comes after a campaign by The Association of British Insurers, who had called for a simpler, faster and more cost-effective system.
Some 500,000 people will benefit from the move each year, the body said.
The new regime, announced by the Ministry of Justice in September last year, will apply to all motor personal injury claims valued at between £1,000 and £10,000, the equivalent of nearly 80% of all claims.
It sets out strict time frames within which each stage of the compensation process must be completed. For example, an insurer must decide on liability within 15 working days of being notified of a claim.
It will also reduce costs by setting a fixed legal cost for each stage, in a bid to reduce the current legal bills which add around 10% to all motor insurance premiums.
The use of standardised electronic claim forms will also reduce duplication and enable decisions to be made more quickly.
© Press Association 2010