On 7 February, the Justice Select Committee heard evidence from the Association of British Insurers represented by James Dalton, Director of General Insurance Policy, and the Association of Personal Injury Lawyers represented by its President, Neil Sugarman into the proposed whiplash reforms set out in the Ministry of Justice’s consultation issued in November 2016.
The Committee Chair, Robert Neill (Conservative, Bromley & Chislehurst) said that the reforms appeared to be driven by concerns about fraudulent claims and asked for evidence. The ABI said that there were 70,000 fraudulent claims in 2015, but this was challenged by APIL, saying that fraud was a misconception and that cold-calling was partly to blame because it creates a perception that claiming compensation is ‘easy’, which gives rise to a suspicion of fraud. APIL called for a total ban on cold-calling. The ABI welcomed the 2015 legislation on dismissing ‘fundamentally dishonest’ injury claims, which had been well-publicised.
Alberto Costa (Conservative, South Leicestershire) thought the stance taken by the ABI in relation to soft tissue injuries was disingenuous because they had continuously described the number of whiplash claims as being an epidemic, but in reality, the number of such claims was reducing. He suggested the problem is fraudulent claims rather than whiplash claims.
David Hanson MP (Labour, Delwyn) was keen to obtain an assurance from the ABI that if whiplash injuries no longer attracted compensation, motor insurance premiums would be reduced. The ABI said that premiums would be reduced, but that many factors influenced premiums.
In response to a question from Kate Green (Labour, Stretford & Urmston), APIL disagreed with proposals that a minor injury should be defined by a timeline (six months in the MoJ consultation), whereas the ABI said that a period based on prognosis could be appropriate for use in personal injury claims.
APIL said that it was incorrect to focus on fraud and that the Government should concentrate on the causes of accidents and on road safety. Neil Sugarman claimed that UK roads were fifty percent more congested than those in Europe and therefore, more hazardous. He highlighted tailgating as a particular problem and [unbelievably] had to explain to one Committee member the meaning of tailgating. Predictably, James Dalton responded by highlighting that UK roads were some of the safest in Europe, if not the world.
Alberto Costa asked about “cowboys brokering claims”. For once, ABI and APIL agreed that unregulated claims firms were “an evil” in society and that improved regulation of claims management companies was urgently required. The Chair said that perhaps the Ministry of Justice had perhaps selected the wrong target and should instead be focusing on such companies?
The next subject for major disagreement was about a tariff-based system of compensation. APIL had a fundamental objection based on the argument that a one-size system does not suit all cases. The ABI thought that a tariff was a sensible approach.
The ABI was quizzed why insurers sometimes pay a claim without a medical report being provided. In a blunt response, the ABI claimed that insurers had no faith in the veracity of medico-legal reports and furthermore, that MedCo does not operate under a regulated framework. The ABI added that insurers had no issue in establishing liability in motor claims (described as generally straightforward) nor with damages based on a tariff system which would mean there would be no place for lawyers in the process. APIL disagreed and called for a ban on so-called pre-medical offers.
The ABI and APIL agreed that there would be an increase in litigants in person and these claimants would need assistance in bringing claims. Not to miss an opportunity, APIL again mentioned claims management companies and suggested that such firms would see an opportunity to represent claimants in court as paid ‘McKenzie friends’. There was agreement that this would be an undesirable development.
The ABI said that it would support an increase to the personal injury small claims threshold from £1,000 to £5,000 to be implemented quickly for RTA claims, but not for EL & PL cases until specific safeguards were put in place for them. APIL did not support the proposed increase.
No-one seemed to know where the proposed £5,000 came from given that uplifting for inflation would increase the current £1,000 threshold to about £1,600 (according to the Chair). ABI said that damages inflation had risen five hundred percent since the late 1990s and this might have influenced the thinking. APIL suggested the proposed threshold had been plucked from the air and was never designed for personal injury claims.
Once or twice the Chair mentioned that the existing claims process for soft tissue injuries was a “nice earner for lawyers”. Unfortunately time ran out but the ABI and APIL were thanked for “a robust exchange”. I would of course expect nothing less!
Written by Jef Mitchell, consultant at BLM