On 28 March the Public Bills Committee heard evidence from Brett Dixon, of the Association of Personal Injury Lawyers, Rob Townend of Aviva and James Dalton of the Association of British Insurers. The context was legislative scrutiny of the whiplash measures to be found at part 5 of the Prison and Courts Bill currently proceeding in the Commons. Opening the evidence session, Sir Oliver Heald MP, Minister of State at the Ministry of Justice, asked this question: “In recent years, since 2005, we have seen a fall in the number of road accidents, we have seen safer vehicles and we have seen a more than 50% increase in whiplash-related claims. Can you put this in perspective and tell us what you think the problem is and whether you think our tariff system is going any way to solving it?”
In reply Rob Townend mentioned that Aviva had seen a reduction in road traffic accidents but an increase in injury claims. Easy access to cash was the cause of the problem and he recognised that “the insurance industry has been part of this in settling claims too quickly. Some of that has been an attempt to avoid ongoing costs.” In addition, claims farming, nuisance calls, cash to crash [sic] gangs, opportunists and claims management companies were driving up claims numbers. He gave an example that in Germany injury claims have fallen in line with a reduction in road traffic accidents. In terms of the Government’s proposed tariff for minor whiplash injuries, he believed that it would go some way, along with the other parts of the proposed reforms, to dealing with the problem around whiplash in the UK.
James Dalton concurred with Aviva’s assessment. He added that although APIL will say that the number of whiplash claims has decreased – true according to the Compensation Recovery Unit (CRU) statistics – at the same time the number of back injury claims has gone up significantly. He suggested that there was, therefore, some re-labelling of what is essentially the same injury. Sir Oliver Heald captured the moment when he said “The circumstances are the same, are they not? A shunt up the back, and then it is described as a back injury rather than a whiplash injury”.
Brett Dixon of APIL was quick to point out that it is not the claimant’s lawyer who enters the details of the injury for CRU, it is the compensator or insurer who describes the injury on the CRU form. He said he “would urge the Committee not to be taken in by the hyperbole prevalent in the sector and think how we as a society we would want to deal with someone who has been genuinely injured as a consequence of somebody else’s negligence.” Perhaps a call for an emotional reaction and maybe indicative of battle lines being drawn?
Rob Townend met this point head on: “There is a point around it being a choice for society – that is the one thing we agree with – whether people want to pay for these claims in their premiums; whether they want the ongoing nuisance calls; whether they want the fraudulent and opportunistic claims. We seem to think of this as victimless crime where people are not injured, but we have to defend our customers from spurious claims through the courts. We have had serious injuries and fatalities related to “cash for crash”.
Numbers of claims have been flat for the last three or four years, but there are significant geographical differences in claims numbers. Rob Townend explained: “Somewhere like Exeter has 20% of road traffic accidents with an injury. If I go to Manchester, it is nearly two and a half times that. Why do they have weaker necks in Manchester than in Exeter? The road traffic accidents are no different, so that tells you the extent of the problem”.
In response to a question by Sir Oliver Heald, Aviva confirmed it would pass on 100% of savings from the whiplash reforms to customers. James Dalton advised that other insurers had also committed to pass on savings. He believed that those that didn’t would lose business in a highly competitive market.
Discussion turned to clause 61 of the Bill, which defines whiplash. The ABI and Aviva had significant concerns that the current version of the clause includes neck and upper torso injury only, and does not adequately cover back injuries. He explained the risk is that whiplash injuries will somehow displace to become back injuries which would not be covered by the legislation (if it is not changed). This is the same relabelling point referred to earlier.
APIL put a different slant on things. Brett Dixon sounded a note of caution as a practitioner; a medic would say that whiplash is a soft tissue injury to the upper torso and neck that has been caused by hyperextension or hyperflexion. He said some thought needs to be given to involving a medic in the way any regulations are drafted. He described this as the most important point, but carefully didn’t mention back injury.
Attention turned to the discount rate – nothing at all to do with the current version of the Bill – and James Dalton once again described the recent decision to reduce it to minus 0.75% as “absurd”, adding that “the fundamental underpinnings of how the discount rate are set are fundamentally wrong, and we need to address that.”
The key points of the debate, and perhaps the most controversial ones as well, are set out above. Other issues such as fraud, cold calling, regulation of claims management companies, referral fees and qualified one-way costs shifting, were also mentioned during an engaging and fast-paced session.
There appeared to be universal agreement on the need to ban pre-medical offers and to tackle cold calling, but perhaps on little else. Whether the Government will think again about the definition in clause 61 remains to be seen – or if not, will we be writing about a plethora of minor back injury claims some time in 2018?
Written by Jef Mitchell, consultant.