The UK Government unveiled plans to try cut down on whiplash claims. This news was released due to whiplash claims being 50% higher than a decade ago, despite the UK having some of the safest roads in Europe and a decline in number of motor accidents.
The UK government claim that millions of motorists could see their car insurance cut by about £40 a year thanks to plans to crackdown on the epidemic of whiplash claims, and so they launched a consultation on proposals which will reduce the unacceptably high number of whiplash claims and allow insurers to cut premiums. Insurers have pledged to pass on savings to drivers – worth a total of £1 billion.
The consultation paper outlines plans to scrap the right to compensation or put a cap on the amount people can claim for minor whiplash injuries. Capping compensation would see the average pay-out cut from £1,850 to a maximum amount of £425. Compensation would only be paid out if a medical report was provided as proof of injury.
Other measures include:
- Introducing a transparent tariff system of compensation payments for claims with more significant injuries
- Raising the limit for cases in the small claims court for all personal injury claims from £1,000 to £5,000
- Banning offers to settle claims without medical evidence. All claims would need a report from a MedCo accredited medical expert before any pay out.
This months’ Your Thoughts hears from a variety of experts on the matter, to whether or not the government’s plans are realistic, how it will affect those claiming and insurance companies themselves and the general consequences of these new plans.
Michael Pace, Partner and Head of Motor Law and Personal Injury at Andrew & Co Solicitors
Another false promise by the insurance industry to reduce motor premiums if the government either bans whiplash claims or raises the small claims limit, thereby stopping them having to contribute to the injured person’s legal fees.
Eight years ago, the insurance industry led by Aviva and Axa persuaded the government that the claims system was wrong and that motor premiums could be reduced by £90 a year if the number of legal fees which solicitors receive was reduced in a successful claim on behalf of an injured person.
As a result, what are known as fixed fees were introduced in 2010. This fixed the amount to be paid to solicitors for any claim worth less than £10,000.
In 2013 the insurers made a further statement to government to saying that if solicitors’ costs were reduced again, then motor premiums would fall by £50 per year. A secret meeting was held at 10 Downing Street, hosted by David Cameron. The outcome was that laws were passed reducing the amount a solicitor gets paid for any whiplash claim to £500.
Well here we go again! Apparently if the government allows the insurers’ suggestion to become law, premiums will fall by £40.
To see the insurers claim that despite there being fewer motor accidents, claims have risen by 50% is ludicrous. This is typical tabloid sensationalism.
The Department for Work and Pensions (DWP) records every compensation claim that is made. The information is supplied by the insurance industry. DWP statistics show that the number of claims being made is falling year on year. These are the government’s own statistics.
The truth is that since all the changes, what we have actually seen is insurance industry profits increase. The cost of premiums has also increased while the only decrease has been in the amount a solicitor gets paid.
The really scary bit for injured people will come if the small claims limit is raised to £5,000, as people will not be able to recover their solicitor’s costs while the insurers will go on using solicitors and barristers to fight claims in court. This will leave injured people at the mercy of the aggressive insurers.
Anyone who has suffered a whiplash injury will know how debilitating it can be; often it involves time off work. Claims usually include loss of earnings, private physiotherapy and, where necessary, payment for care and assistance as well as recovery of any insurance excess. Injured people will not only be injured but out of pocket too, while the insurers will just get fatter off their increased profits.
Steve Vickers, ATE Account Manager at PIB Insurance Brokers
Whiplash exists – just ask anyone who has suffered from it. However, the UK does not have a compensation culture but rather a perception of a compensation culture thanks to claims management companies and their advertising.
One of the many reasons given by the government for its reforms, is the UK having a far higher number of whiplash claims than our European neighbours. However, World Bank research shows that the UK has the most congested roads in Europe, with 79% more vehicles per kilometre of road than ‘second placed’ Belgium. It is therefore not surprising that the UK has such a high number of low velocity impacts and resultant claims.
The proposed reforms will dramatically restrict people’s access to justice and are unlikely to reduce premiums for motorists. The Access to Justice Campaign estimates that the government’s plan will initially prevent 90 per cent of accident victims from pursuing claims with legal assistance if the small claims limited for claims is raised to £5000 – or even at all if the government simply removes the right for people pursuing soft tissue claims following road traffic accidents which is its preferred result and that there will be approximately 60,000 job losses across the industry in law firms, barrister’s chambers, medical agencies and insurers. The one area that will thrive as a result of the raising of the small claims limit is the claims management sector, which will undoubtedly take over the running of these cases for a percentage of the damages using the successful PPI refund model with no legal qualifications and no limit on what they can charge This will have the opposite effect of reducing the nuisance calls from claims management companies that plague us and crucially, it is also unlikely to reduce claims costs significantly for the motor insurers.
There have been numerous previous reforms to the RTA claims process, each one of them trumpeted that motor premiums would reduce, such as:
October 2003 introduced (stet)costs for RTA claims
April 2010 saw the introduction of the RTA claims portal and fixed portal costs
April 2013 saw portal costs slashed, the abolition of the recoverable success fees and ATE premiums
July 2013 Saw fixed fees introduced for/EL/PL claims as well
May 2014 – Court fees increased
April 2015 – Experts fees fixed
None of these measures reduced motor insurance premiums and it is a dubious claim to say that these reforms will help to reduce motor insurance premiums when another increase has just been announced in Insurance Premium Tax.
Francis is the Founder and Senior Partner or Francis George Solicitor-Advocate
Most personal injury cases are worth less than £5,000. If the small claims Court limit for personal injury claims is increased to £5,000.00, that will inevitably increase the amount of individuals acting as Litigants in Person. That could conflict with the Overriding Objective pursuant to Part 1 of the Civil Procedure Rules 1998 i.e. the parties will not be on an equal footing Defendants are almost always represented by Solicitors that are funded via the insurers and/or professional claims handlers.
The small claims track does not allow for the injured person recover costs from the unsuccessful party. The sequelae of the changes is that a genuine Claimant is likely to suffer more than once i.e. he/she has been injured through no fault of their own and secondly he/she will have to fund the legal help they will need to pursue a claim from their own pocket. The inevitable consequence is that many people with legitimate claims may not be able to afford legal help and in those circumstances, they will be forced to abandon their claims.
There is also a fear that as a consequence of people not being able to afford legal advice, Claims Management Companies will exploit the situation. The level of cold calls and spam text messages encouraging personal injury claims could in all likelihood increase. With the proposed changes, there is a risk that CMCs will seek to pursue unmeritorious claims and that will have the opposite effect of what the Government is trying to achieve.
To summarise, if the Small Claims Track limit is raised to £5,000 it is likely that genuine victims of injury will not be in a position to afford the legal help they need to bring genuine claims. There will be an increase in terms of cold calling from claims management companies who will seek to take advantage of vulnerable people who cannot afford legal representation.
In most cases, the most serious aspect of a car collision is the personal injury that has been suffered and not the damage to the vehicle. The purpose of insurance is to provide recompense for that. The Government would do better to tackle the costs associated with repair and replacement vehicles instead of seeking to reduce the level of damages where people have genuinely suffered an injury.
Commentary provided by Rhiannon Cambrook-Woods, Managing Director at Zest Recruitment & Consultancy LLP
There are over 60,000 legal practitioners employed in this sector and despite what the media say about the UK having a so-called ‘compensation culture’, to process claims even of low value still requires skill by both by the Claimant’s and the Defendant’s representatives. The number of potential employees affected is huge and the impact even more so. Indeed, we are already seeing a significant rise in the number of people looking to either change specialism or move away from law in its entirety.
To change specialism in the current climate is not easy. In terms of the impact on the innocent, one of the main concerns of this continual dumbing down is how many cases have been missed and or negligently settled where the matter should have indeed been referred to a complex/multi track team due to a resultant brain injury that was missed and the enormous consequences on that individual and his/her family. One such error is simply one too many.
Let us not forget those insurers who ‘own’ law firms and have made millions in profits over the years as well as the impact on its own employees. Policy wise I am confident that insurance firms will indeed be creative in offering policies, such as a ‘compensation’ policy. In all likelihood these will be branded in a far less obvious manner but the policy and cost for that policy will be available and indeed the insured will be encouraged to take out this protection in the event of an accident. It will be represented from a PR point of view in a much more subtle way or the finger will at the very lest be pointed towards Government reforms.
To add to the above, everyone has the potential to suffer at the consequence of another by accident and may indeed require assistance such as rehabilitation, recover costs such as loss of earnings, damaged property as well as compensation for the pain and loss of amenity suffered. But their access to justice as it currently stands will be severely restricted or at best come at a price in the absence of insurers, Solicitors and the Government taking a cohesive, genuinely measured approach where the injured party must remain at the very heart of the matter.
A large proportion of whiplash claims fall under £5,000.00, yet the injuries sustained at that level of compensation can be very debilitating and include at least three medical reports, a GP, Orthopaedic and often a psychological report.
The level of injury and indeed compensation over this amount is significantly worse and often includes even more reports from the same discipline plus additional disciplines such as neurosurgeons.
What is often misunderstood that the onset of a whiplash injury can manifest into something so much more such as fibromyalgia. The dumbing down of these reforms even further will mean those dealing with them will lack experience and indeed lack the red warning signs of when a whiplash is simply not a whiplash injury, a term far often overplayed and undervalued.