Last week the Ministry of Justice responded to the Justice Committee’s report on small claims published in May. Paragraph 36 of the MoJ’s response confirms that the Government will postpone implementation of the whiplash and small claims reform programme until at least April 2020. Justice Committee Chair Bob Neill MP then wrote to the Secretary of State for Justice to seek further clarification on certain aspects of the reforms. Continue reading
On the same day this week that Chancellor Philip Hammond said the government would “progress urgently” to consult about the personal injury discount rate, the Petitions Committee, working jointly with the Transport Committee, heard evidence about the cost of car insurance for young drivers. The topic will be debated in Parliament after a petition calling for a £1,200 cap on the cost of car insurance for young drivers secured more than 180,000 signatures. The Parliamentary debate is scheduled for 20 March and it may be mere coincidence that this is the same date on which the statutory instrument bringing in the new negative discount rate is scheduled to take effect.
The Lord Chancellor (LC) Liz Truss bit the bullet today and set the discount rate at minus 0.75%, to apply from 20 March. The news was issued via this statement to the Stock Exchange at 07:00 this morning. As a matter of process, Ms Truss should be congratulated for not ducking a very awkward decision – even if the financial implications of her decision are of huge importance for new and current outstanding cases alike. As to substance, views will inevitably differ hugely.
The lowered rate (it’s decreasing by a staggering 325 basis points from 2.5%) has attracted notable criticism this morning from insurers because of its inflationary effect on awards and reserves. The LC said today that she “recognise[s] the impacts this decision will have on the insurance industry. My Rt. Hon. Friend the Chancellor will meet with insurance industry representatives to discuss the situation.” It could be expected that that might be a fairly high-tempered discussion.