Insurers will be the winners and consumers the losers in personal injury ‘reforms’, economic study shows

9 February 2017

Insurers will be the winners and consumers the losers in personal injury 'reforms', economic study shows   Insurers will be the winners and consumers the losers in personal injury 'reforms', economic study shows      Insurers will be the winners and consumers the losers in personal injury 'reforms', economic study shows

Strategic Alliance Press Release

Insurers not consumers will benefit if government plans to change the way people seek compensation for personal injury are implemented – despite attempts to portray the reforms as a bid to tackle questionable whiplash claims.

The findings of an economic study by Compass Lexecon show that gains from the proposed changes will boost insurers’ profits. At the same time the plans would curtail the number of people who can claim for soft tissue injury caused through no fault of their own.

The government is putting forward changes that would deprive people from being able to recover the cost of valuable legal advice for personal injury claims worth £5,000 and under.

The Ministry of Justice (MoJ) has proposed a five-fold increase in the small claims limit which would affect people injured through no fault of their own and would mean serious personal injuries, including some facial scarring, would be considered as ‘small claims’.

The research focused on the government’s impact assessment of proposed changes to the soft tissue injury claims process and an increase in the small claims court limit.

It was commissioned by the Law Society, the Association of Personal Injury Lawyers (APIL), the National Association of Motor Accident Solicitors (MASS) and carried out by economists at Compass Lexecon.

The findings underline the outcome of an earlier undercover investigation by consumer organisation Which? that last year threw the spotlight on motor insurers increasing driver premiums after minor collisions, even when policy holders were blameless.

The Which? research, published in August 2016 found the insurance industry reneged on a promise to reduce premiums after the government brought in reforms to reduce whiplash claims.*

Law Society President Robert Bourns said: “These findings show that motor insurance companies are set to benefit, with costs savings not passed on to ordinary people. Even if insurers pass on an implausible ninety per cent of their costs reductions to policy holders, there will still be a net loss for consumers and taxpayers resulting from these proposals.

“Raising the small claims limit to £5,000 for personal injury claims will mean that many people who have suffered minor soft tissue injury through no fault of their own won’t be able to get the legal advice they need to make a claim that they are entitled to bring in law.”

Neil Sugarman, president of the Association of Personal Injury Lawyers (APIL) said: “It has long been established that insurers have saved billions of pounds from previous reforms yet premiums continue to rise. Compass Lexecon’s report confirms that consumers and taxpayers will be worse off as a result of the Government’s preferred reforms. The total ‘benefit’ of these reforms goes to the insurance industry. Given that there is scant evidence of a connection between personal injury claims and the setting of premiums, consumers should not expect their premiums to be any cheaper if these reforms go ahead. They will, however, feel the difference if they are injured and are forced to face insurers in a court system better suited to disputes over parking tickets and faulty washing machines.”

Simon Stanfield, Chair of the National Association of Motor Accident Solicitors (MASS) said: “This independent report confirms what we have suspected all along. Unless at least 90% of the supposed ‘savings’ from the Government’s proposals are returned to consumers through lower motor insurance premiums, both consumers and tax payers will be worse off, to the benefit of insurers. With only 20% of the motor insurance market having committed to returning savings to consumers, there should be little doubt left that the vast majority of the costs ‘saved’ in stripping out legal representation for the majority of injured claimants will be simply pocketed by the insurance companies.”

Ends

Notes to editors:

*Figures showed that previous government reforms targeted at reducing whiplash claims led to personal injury claims arising from road traffic accidents falling by 23,000, saving insurers almost £520 million.

The Law Society of England and Wales is the independent professional body, established for solicitors in 1825, that works globally to support and represent its members, promoting the highest professional standards and the rule of law.
Media contact: Law Society Press office 0207 320 5764

APIL (Association of Personal Injury Lawyers) is a not-for-profit organisation whose members are dedicated to campaigning for improvements in the law to help people who are injured or become ill through no fault of their own.
Media contact: 0115 943 5416 / 0115 943 5431 / 07808 768623
jane.hartwell@apil.org.uk / lizzy.freeman@apil.org.uk

MASS is a national association of motor accident solicitors who represent victims of road traffic accidents. The society is non-profit making and all our members are experts in road accident and personal injury claims. MASS has been lobbying the Government for 25 years to ensure and protect the rights of the accident victim.
Media contact: 07775 853789 / 0117 925 9604
tim@mass.org.uk


Our Mission Statement

MASS promotes the highest standards of legal services through education and representation in the pursuit of justice for victims of road traffic accidents.