On the Civil Liability Bill and the Government’s whiplash programme
For nearly three years now, we have adopted a twin approach – we’ve been vocally critical of many of the proposed measures, and campaigned vigorously against some of the proposals, whilst working alongside MoJ on the practical difficulties.
The MoJ are absolutely in no doubt of our position. They have also however, needed our collective knowledge and expertise of the realities of the claims process, and that’s a great endorsement of this society’s credibility.
The pragmatic opposition by MASS to the direction of the reforms has demonstrated real value – and continues to do so.
At a time when the number of RTA claims has fallen by more than 18% over the last two years to the lowest level since 2009, we will continue to press the Government that the more severe elements of the reforms are not only unfair, but unnecessary.
Legal costs have been falling for over ten years, whilst the cost of repair bills has risen by 33% since 2013. But we’re all blamed for the rising costs.
The mantra chanted by the insurance sector has been that fraud is a main driver – yet the figures suggest that all fraud stands at 0.22% – but that includes fraud on bent mental claims, fraud on hire and other fraud such as material non-disclosure – so whiplash is a fraction of a fraction. This isn’t about fraud reforms, and clearly never could have been.
Yet still the legal sector continues to be unfairly blamed for “higher claims costs”. This at a time when LASPO has gifted the insurers shareholders with billions, at cost to the injured victim with the non-recoverability of success fees and ATE insurance, and fixed costs – and the MOJ massively inflating court costs by up to 680%. It seems everyone from the insurance sector, and the MOJ have benefited, yet the accident victim and their legal representatives have paid the cost, and at the same time blamed for higher costs. You simply couldn’t make it up.
The current proposals will cause yet more disparity and unfairness: between claimants in the same accident who have different kinds of injury; between claimants with the same injury suffered in different circumstances; and between claimants with the same injuries whose symptoms last for different periods.
The Government is effectively saying that the damages awarded to an occupant of a motor vehicle are disproportionate, but if those same injuries are sustained outside of a motor vehicle, then they are proportionate to the injury.
You theoretically could, and practically will, have the crazy situation of someone in a car being shunted into a cyclist where the rear end shunt claimant in a vehicle would be awarded £225 for a three-month injury, the cyclist in the same accident receiving a value of 6 times for the same injury, and, If that same driver was on his way to Heathrow, and his flight delayed for a few hours, he’d see damages of around £400. So, damages for people who don’t drive cars is right and reasonable, and
the award set by Judges, but those who drive cars should receive less, because their injury damages are apparently “disproportionate” and valued significantly less.
We believe that this is fundamentally unfair.
As Lord Woolf said, just a few months ago, the reforms deliberately introduce injustice into our law. It involves discrimination against legitimate claimants, irrespective of their means.
The Ministry of Justice respectfully really should listen to such eminent counsel.
The Justice Minister Rory Stewart has asked – on several occasions – why is it that the number of road traffic accidents (RTAs) have reduced by 30% since 2005, despite cars becoming much safer, whilst whiplash claims have increased by 40%?
I’d like to answer his question now.
The number of deaths and serious injuries on UK roads has fallen dramatically over the last twenty or so years.
We of course welcome this.
But the Department for Transport says that it has long been known that a considerable proportion of non-fatal casualties are not known to the police.
In fact, hundreds of thousands of RTAs go unreported, particularly in relation to “slight” injuries. The DfT estimates that between 2012 and 2016, an average of around 426,000 “slight” injuries per year and around 57,000 serious injuries from RTAs went unreported to the police.
In short, the number of fatal and serious accidents may have decreased, but the number of less severe injuries has increased with more accidents. Many people do not pursue claims.
It is wholly inaccurate for the MoJ to consider only the number of reported road traffic accidents in formulating and publicly justifying public policy, when official figures acknowledge that there are nearly half a million unreported casualties of road traffic accidents every year.
Why should there still be so many accidents when cars are so much safer?
We have 2 million more cars on our roads since 2005.
We have some of the highest concentration of vehicles on roads in the world.
Average car speeds due to congestion are amongst the lowest in Europe.
We have a higher average occupancy of cars than many countries, so if an accident does occur, more people are likely to be injured.
So put all of that together and with slower but busier roads and crowded cars, it follows that low velocity accidents with more minor injuries are more likely to occur in the UK rather than high-speed, more serious injuries.
These accidents are more likely to be rear end collisions which are more likely to result in whiplash injuries.
These accidents are not simply going to stop because the insurance industry no longer wants to pay for them.
The Civil Liability Bill will shortly complete its parliamentary stages and will almost certainly receive Royal Assent before Christmas.
With Brexit dominating the political landscape, it has been difficult to get parliamentarians really motivated on our behalf, although some lesser concessions have been achieved during the passage of the Bill.
Yes, the Bill is important, but it is not the main issue.
Unwanted though the new processes may be by claimant solicitors, they can probably be –and will need to be accommodated.
No, the real damage to justice is not going to result from the architecture of the processes being proposed, but their implementation.
Introduced in tandem at the current rates and levels proposed, the fixed tariff scheme and the proposed increase in the Small Claims Track Limit, will fundamentally change the claims landscape for whiplash and related injuries.
They will severely reduce the likelihood of independent legal advice for the victims of so-called low value motor accidents.
When combined with the new online-only LIP Portal, a gateway for CMCs, the impact will be permanent and nothing but detrimental to claimants.
It still doesn’t have to go this way.
Both the tariff and the new small claims limit could both be set at levels that are fairer and more reasonable for accident victims.
The rights of individual accident victims can still be protected, and the honest majority should not be punished for the actions of a small and dishonest minority.
There is still much to play for. It’s not over yet.
The final rates have not yet been set or agreed by Parliament. There is still much to play for. MASS will continue to keep the pressure on and seek a fairer and more reasonable outcome.
Development of the new LIP Portal
Dominic Clayden from MIB is speaking to us this afternoon and will no doubt say what he can about the development of the new Portal, through which all the proposed changes will manifest themselves.
For our part, we really do not know yet whether April 2020 is an achievable date for a fully-functioning and fit-for-purpose system.
Right now, there appears to have been little thought about how Special Damages work adequately for LIPs. There are currently no proposals to assist claimants who are unable to resolve their case through ADR, or choose not to do so, and who need to use the court process. How will non-injury claims be assisted post-reforms without the costs subsidised by injury claims?
MIB know that they have a big job on their hands and are under no illusions that Lord Keen’s ill-informed belief that RTA small claims are simple and straightforward are quite frankly nonsense. The developers will discover that for themselves.
Adequate safeguards must be in place to support LIPs through the new process, particularly those from vulnerable groups, and the digitally excluded, who will be baffled by the new system even more than other claimants.
Although difficult to comprehend for those of us who see the internet as an increasingly integral part of our lives, Ofcom still classifies 13% of the population as non-internet users, including 48% of over 65s, 20% of the C2 economic group and 22% of DEs.
We know from the experience of MedCo that insufficient testing resulted in severe problems that were then more difficult to resolve. It was too rushed in its implementations and poor and inadequate planning led to unforeseen and unintended consequences. That must not be allowed to the Portal, even if it means further delay.
Part 2 of the reforms is also urgently needed to prevent clear loopholes emerging.
Many organisations, including insurers, make huge sums (amounting to millions of pounds) from non-fault hire and repair claims, in addition to medical reports and rehabilitation.
For example, hire companies pay referral fees to insurers to provide hire services, and the at-fault insurer pays inflated hire costs demanded by the hire company to fund the referral fee it pays to the non-fault insurer.
Competitively it is in the interests of insurance companies to maximise the amounts that at-fault insurers have to pay to their rivals.
This has been exacerbated with car repairs becoming increasingly more complex and expensive as car technology has developed.
A Telegraph investigation last year estimated that the system used by insurers representing non-fault drivers to charge rival insurers representing at-fault drivers for repair work could be worth as much as £750 million, equivalent to around 5% of annual insurance premiums.
MoJ should publish Part 2 of the reforms without further delay and make progress on addressing some of the wider problems in the sector.
The insurance sector has a poor history of passing cost savings to consumers and does not maintain promised cost savings to consumers following short term reductions, as happened following LASPO.
When insurance companies claim that the cost of motor insurance has reduced, they are usually only referring to new business only, ignoring the automatic premium increases applied on renewals.
Any “savings” for consumers are likely to be very small. Most will be consumed by the likely additional costs to insurers of having to deal directly with many of their premium holders.
No-one should be under any illusion, there will always be another and another excuse for increasing motor insurance premiums.
Over the summer, MASS called upon the Government to go further than simply reporting – way in the future – on savings passed back to consumers.
Now is the time to consider stronger measures to help and protect insurance consumers to get a better deal from insurers.
Serious consideration should now be given to how consumers can benefit from limiting future unjustifiable price increases in insurance premiums, encouraging greater switching of premiums and limiting price increases on automatic premium renewals.
The Financial Conduct Authority (FCA) should consider the potential viability of a relative price cap on future increases in insurance premiums.
If consumers can benefit from a price cap in the energy sector, then it should be perfectly possible in the insurance market to benefit consumers by limiting premium increases.