Today’s announcement of government plans to reform personal injury claims has predictably split the market, with claimant representatives incensed and defendants pleased.
This article first appeared in Legal Futures, 17th November 2016
James Dalton, the Association of British Insurers’ director of general insurance policy, said: “The insurance industry has campaigned long and hard to tackle the impact of whiplash-related claims on honest motorists, so we welcome these proposals.
“Introducing a range of measures, such as limiting the compensation payable for these injuries, will help create a more honest system that doesn’t reward those who want to exploit it.
“If implemented, these reforms will ease some of the pressure recent increases in insurance premium tax and repair costs are already putting on premiums.
“We… look forward to participating in this consultation, and the debate about how we can ensure fair compensation for genuine claimants and a fairer deal for motorists.”
Mark Wilson, group CEO at Aviva, said: “This is necessary and courageous action on the part of the government to protect the consumer and demolish the fraudster. Fraud is not a victimless crime and law-abiding motorists have paid for the UK’s dysfunctional and fraudulent motor claims system through inflated motor premiums for too long.
“Let me be clear: Aviva will pass on 100% of the savings to our customers.”
Simon Stanfield, who took over yesterday as chairman of the Motor Accident Solicitors Society (MASS), said: “The government’s proposals will fail to protect the interests of most claimants. We’re disappointed that they’re pressing ahead with this agenda, despite the mounting evidence of the negative unintended consequences.
“Whilst the banning of pre-medical offers is welcome, raising the small claims limit for all PI claims and capping minor whiplash claims will fall straight into the hands of those who would exploit claimants, and the system.
“It is still not too late for the government to take stock and allow the industry to come forward with a fairer and more proportionate programme to tackle fraudulent claims. Past cross-industry initiatives have demonstrated that so much more can be achieved by dialogue. The sector should be given time to discuss areas of possible common agreement.”
Brett Dixon, vice-president of the Association of Personal Injury Lawyers, branded the proposals “heavy handed and excessive” and said they took the common law “back to the dark ages”. Rather, the government should be addressing “the scourge of cold calling” by claims management companies.
Andrew Twambley, a spokesman for lobbying group Access to Justice, said ordinary people would have their rights taken away to benefit insurers. He added: “We believe that thousands of professional jobs could be placed at risk, both in law firms and in insurance companies. Without bona fide legal representation, customers will instead be targeted by unscrupulous claims management companies. They will quickly fill the vacuum left by law firms exiting the market.”
Mr Twambley, however, welcomed the proposed ban on pre-medical offers by insurers, “which have encouraged fraud and frivolous claims, the very thing insurers say they are opposed to”.
He also urged a collaborative approach between all sides so as to resolve the issues “without the need to costly and time-consuming legislation with potentially unforeseen consequences”.
He was critical of the consultation closing date of 6 January 2017, “as this effectively means that three weeks will lost to us thanks to the Christmas and New Year holidays”.
Tom Jones, head of policy at Thompsons Solicitors, which has been lobbying vigorously against the reforms, said that despite the number of injury claims falling, the government had been “bullied” by insurers. There was not “a shred of evidence” to justify the “hugely unfair plans”.
He said: “Claims of a whiplash epidemic are unsubstantiated. It is astonishing the government has ignored that evidence, and has seen fit to use insurance industry propaganda on whiplash to take away access to justice from anyone who is injured, not just on the road but incredibly also those injured in the workplace.
“Data from the Association of British Insurers shows claims costs fell in 2015 – the fifth consecutive year of falling costs – and were more than 30% lower than in 2010. In effect the insurers have had a £8.73billion windfall over the last five years. And yet premiums have continued to rise.
“Their pledges to pass savings on to motorists, off the back of the MoJ’s consultation announcement, are frankly not believable… If they go ahead, these government reforms will hit injury victims, on the roads and in the workplace, while lining the pockets of car insurer CEOs and their shareholders.”
Qamar Anwar, managing director of First4Lawyers, described the proposals as “far worse than anyone could have anticipated and do nothing other than to benefit the insurance industry fat cats at the expense of innocent accident victims”.
He added: “We sincerely hope that there is a real consultation and that this isn’t a ‘done deal’ as the language of the announcement suggests…
“Far from reducing premiums, reforms to date have only increased insurers’ profits and there is no reason to believe that it will be any different this time. The government has no mechanism to monitor and enforce lower premiums. A ban on pre-med offers is welcome, but frankly insurers will not have to make them if the proposals are forced through in their current guise. This is simply a licence for insurers to print cash.
“All personal injury claims should be assessed on the impact they have on each individual. By capping or even removing damages, the government is essentially trivialising what can be a serious injury with long-lasting consequences. At the very least, I would want to see some kind of rehabilitation scheme set up to ensure injured people get the help they need to recover, but this will not cover the impact their injury may have on their and their families’ lives.”
Well-known claimant lawyer Donna Scully, a partner at Carpenters and former chairman of MASS, predicted that the “short-sighted and unfair” reforms may have the opposite effect.
“Previous reforms, such as LASPO, have demonstrated that ill-considered and predominantly one-sided agendas do not achieve their objectives.
“This spurious questioning of the legitimacy to pursue justice and compensation is deeply troubling for one injury only. Condemning legitimate and reasonable claims challenges one of the basic foundations of our centuries-old legal system and our system of restorative insurance cover.
Vidisha Joshi, head of PI at London firm Hodge Jones & Allen, said that increased levels of traffic and negligent driving were “the real reasons” for the ongoing rise in road traffic incidents.
“These are the issues that need to be tackled, rather than finding ways to save insurers money. There are other issues too, including cold calling, which has been a perennial problem but, government still chooses not to ban it.
“I had been hoping that we would be able to bring all involved in personal injury together to discuss the best way forward to tackle key road traffic issues. Sadly, once again the rights of injured people are the target and it is hugely unjust.”
In one measured response from the other side, Ian Davies, a partner at defendant insurance specialists Kennedys, said the news would be a “significant boost” to many insurers and a “severe blow” to many in the claimant market.
“The boundaries of the consultation appear to go further than previously proposed. Consequently, it is sure to generate a forceful response from all quarters. In particular, we anticipate an outcry from those who deal with injury claims outside of the whiplash space who will be affected by the proposal to increase the small claims limit for all personal injury claims.
“What is clear from the statement is that the government remains determined to continue to tackle fraud and the compensation culture surrounding whiplash claims. What the government must also consider is the potential for unintended consequences.”
Law Society president Robert Bourns said the proposals would “completely undermine the right of ordinary people to receive full and proper compensation from those that have injured them – often seriously – through negligence”.
“People may be tempted to try to bring claims themselves without expert advice. This will clog up the court system creating a David and Goliath situation where people recovering from their injuries act as litigants in person without legal advice – those defending claims can often afford to pay for legal advice…
“Spinning this proposal as an attack on the ‘compensation culture’ and claiming it will reduce premiums is misleading. If you are injured through no fault of your own you should be allowed to claim for that.”