posted on 22 08,2018 / 11:52 am
An estimated1.3 Million British workers have suffered a personal injury between 2016/2017. With a focus on motorists, insurance companies have pointed out that PI claims for whiplash alone has increased by as much as 780 000 claims in the same period. The new PI claims reforms introduced this year with the civil liability bill, combined with the Government’s acceptance earlier this year of the ABI’s proposal to fund and build a new litigation portal must be noted. It appears the insurers have taken the personal injury sector by the collar. And this is not the first time that the solicitors and the insurance industry have clashed. Reports by the Insurance Times stated that many solicitors and law firms in the UK are not impressed with this decision as they do not consider insurer’s involvement as impartial. Access to Justice’s Andrew Tambley exclaimed that “The whole idea behind the so-called PI claims reforms is to prevent/discourage claims, in order to save the insurers money so that they can pay dividends.”
The main motivator behind the PI claims reforms introduced with the Civil Liability Bill in March this year centralises around whiplash-related proposals. Objectives are set out to address the high number of whiplash claims, coupled with the need to reduce the alarming high volume of fraudulent claims in the UK. But it does not appear that this issue is so cut and dry. The Law Society, MASS, and other law firms have cited concerns about its implementation. MASS chair Simon Stanfield said to Legalfutures: “MASS shall continue to fight the proposed changes to RTA whiplash claims at every opportunity”. Big questions need to be answered about how the state proposes to implement, operate and mitigate the reform’s possible ruinous consequences.
The reforms are expected to affect 96% of all whiplash claims. Goals are aimed at simplifying personal injury claims procedures, whilst simultaneously adjusting the settlement rates. Two small claims thresholds have been proposed, thus raising the small claims limit for RTA to £5,000, and all other personal injury to £2,000. According to The Law Society’s Gazette, The Law Society president Joe Egan stated that “These changes will mean people injured through no fault of their own will struggle to get justice. The Law Society does not accept that these limits are reasonable and we continue to oppose these reforms.”
It is evident that many personal injury solicitors are scrambling to get a foothold after a civil liability bill impact assessment was published by the MoJ revealing potential losses of up to £81m per annum. It is estimated that PI practitioners stand to lose around £32m per year from claims that will no longer proceed, with a further reduction in income totalling £49m from claims where legal representation will no longer be allowed.
These reforms do not affect solicitors and law firms alone. The overall goal of the new framework is to deliver a system that is fair to customers, claimants as well as taxpayers. A solution is to be found that will ensure the people of England and Whales receive fair compensation without excess costs to the system. It is estimated that motorists can look forward to a saving of up to as much as £35 per year on their insurance premiums, while claimants can receive compensation in full.
Furthermore, the hope is that the small claims court would be relieved of its burden as more claims will proceed without lawyers.
In conclusion, these reforms have certainly come under mass scrutiny from every angle, and clearly it is going to take time to see how these new implementations materialise.
It is believed that 85% of the obvious benefit to the insurance industry will be passed on to the customer. In fact, 26 insurance companies have signed a letter to the Lord Chancellor, David Gake promising to pass on full savings in lower motor premiums.