In October 2016 the Claimant Personal Injury sector gave a collective sigh of relief, following reports that the Ministry of Justice (MOJ) was unenthusiastic towards whiplash reform proposals, announced in August 2015. The reforms proposed the increase of the small claims limit to include personal injury claims up to the value of £5k, and the abolition of low value whiplash claims.
This relief has been short-lived, as the MOJ has, today, announced a consultation into the whiplash claim process.
In contrast to recent rumours of an unwillingness to push ahead with the whiplash reforms, Justice Secretary Elizabeth Truss said:
"For too long some have exploited a rampant compensation culture and seen whiplash claims an easy payday, driving up costs for millions of law-abiding motorists.
These reforms will crack down on minor, exaggerated and fraudulent claims. Insurers have promised to put the cash saved back in the pockets of the country’s drivers."
The consultation, open until 6 January 2017, will consider a range of options including:
- the mandatory requirement to obtain a MedCo accredited medical expert before any pay out
- the extension of the small claims limit to £5k (from £1k) for all personal injury claims, including employers and public liability claims
- whether there is merit in imposing a fixed sum or fixed tariff award for injuries; or even potentially the removal of compensation for all minor road traffic accidents where injuries are anticipated to resolve within 6, or even 9 months of the accident date.
Of the options available, the government is understood to favour a position whereby a fixed sum is paid in compensation of RTA related soft tissue injuries where the injury duration is less than 6 months, with a fixed tariff where the injury duration exceeds 6 months. The government also favours the small claims limit increase to £5k and medical reports being produced for all soft tissue injury claims. It is estimated that such reforms would bring about an 85% saving to defendant insurers/self-insureds, by lowering the volume and value of RTA claims.
The increase in the small claims limit in particular is likely to have a profound impact upon the insurance claims industry. The vast majority of injury claims pursued are valued at under £5k. As such the proposed reforms could limit the costs recoverable by Claimant's solicitors to a few hundred pounds per case. Additionally, the nature of the small claims process could limit the investigations that Defendants are able to undertake into claims given the restrictive timescales, and mechanisms that are exempt from the small track.
Elsewhere in the consultation, the government is looking to gather views on a number of issues affecting the personal injury sector. These include the implementation of recommendations made by the Insurance Fraud Taskforce, credit hire claims and the introduction of a points based system, similar to that used in France, Spain and Italy, which could be adopted for the assessment of injuries and thereafter damages.
With the government keen to implement the reforms as soon as possible, the already struggling Claimant personal injury sector is bracing itself for an increasingly challenging future.