Claimant personal injury lawyers have been left questioning why the government was prepared to announced in yesterday’s Autumn Statement that it is to ban cold-calling in relation to pensions, but not to stop it in personal injury – and whether Chancellor Philip Hammond let slip that the whiplash reforms are already a done deal.
This article first appeared in Legal Futures, 24th November 2016
Mr Hammond also drew ire for announcing another rise in insurance premium tax (IPT) and repeating the claim that the whiplash reforms will save drivers an average of £40 – with some predicting that the former will wipe out the latter.
Simon Stanfield, chairman of the Motor Accident Solicitors Society, said: “It is apparently possible to ban cold calling in some sectors, but yet claim that it should be preserved in personal injury. Unscrupulous companies are ripping off consumers daily and this must be addressed urgently as part of the fight against fraud.”
Citing statistics from Aviva, leading claimant solicitor Donna Scully said: “If consumers can be protected from colds calls from people selling pension products – and mortgage brokers since 2004 – then there is absolutely no excuse for not protecting them from the estimated two million cold calls and texts per day related to personal injury.”
Mr Hammond announced that IPT – which increased from 6% to 9.5% a year ago, and then to 10% last month – will rise again to 12% next June.
In his speech he added: “I can confirm the government’s commitment to legislate next year to end the compensation culture surrounding whiplash claims – a major area of insurance fraud – saving drivers an average of £40 on their annual premiums.”
Mr Stanfield said: “Based upon past evidence, absolutely no one should believe that the supposed savings from the proposed changes to the reforms process will be passed on to consumers. Whether it is IPT increases or market conditions, there will always be other excuses for high motor insurance premiums.
“The Chancellor’s commitment today to proceed to legislation next year makes a mockery of the supposed consultation process that is underway.”
The Association of Personal Injury Lawyers tweeted: “Insurance premium tax rate will increase by 20%. Motorists could wave goodbye to the supposed £40 saving from PI reforms.” Its vice-president, Brett Dixon, added: “£40 in exchange for losing access to justice was always a terrible deal. It now seems certain you won’t even get that.”
President Neil Sugarman added: “The Chancellor’s statement that reforms to personal injury claims will deliver lower premiums for motorists while at the same time announcing an increase in insurance premium tax is astounding.
“The insurance industry has a track record of failing to pass on savings made from previous reforms by lowering premiums. These excessive reforms will affect the long-held right of genuinely injured people to claim compensation, taking the common law back to the dark ages.
“The excuse that they will generate a saving for motorists when those same motorists will almost certainly be forced to pay for the increase in tax simply adds insult to injury.”
Huw Evans, director-general of the Association of British Insurers, was unhappy too: “Yet another increase in IPT is a hammer blow for the hard pressed. It will hit consumers and businesses alike, hurting those who buy business, motor, property, pet and health insurance.
“It marks a doubling of IPT since last year and to claim a consultation on whiplash reforms which hasn’t even gone before Parliament yet will offset this just won’t cut it.”
Ian Hughes, chief executive of consultancy Consumer Intelligence, said: “In one fell swoop, the Chancellor has removed much of the supposed financial benefit to drivers from the whiplash compensation reforms announced last week.
“Young drivers will effectively see any reductions they had been looking forward to wiped out as a two point increase on today’s average premiums of £1,831 equates to £35.”
But campaigning claimant law firm Thompson said it was “arrant nonsense” for insurers to suggest that the IPT increase would offset the savings from whiplash reform.
“The insurers will, as they always have, simply pass it on in higher premiums without it touching their bottom line,” it said. “Profits and dividends (and their senior remuneration packages) will remain untouched, as ever.
“Insurers conveniently don’t mention the straight ‘gift’ of a minimum of £200 million extra profit from the whiplash reforms (as calculated by the government).
“The Autumn Statement shows beyond doubt that the Conservatives are very firmly strapped into the back seat of a juggernaut loaded with cash with the ‘privileged few’ of the car insurance market in the driving seat as it ploughs over the top of working people those who are in the Prime Minister’s words ‘just managing’.”
Law Society chief executive Catherine Dixon said: “We continue to express extreme concern over the government’s ill-advised assault on personal injury laws. These proposals will completely undermine the right of ordinary people to receive full and proper compensation from those that have injured them – often seriously – through negligence.”