Has the Chancellor revived the whiplash reform programme?

Yesterday’s budget marks just over two years since former Chancellor George Osborne announced, in his 2015 Autumn Statement, significant reforms to damages for whiplash claims and five-fold increase in the small claims limit for road traffic injury cases. Material released by the Treasury yesterday appears to indicate that Government expects to implement these reforms before April 2019.

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Three very different current Bills affecting general insurance are worth following, with each moving at its own pace

The Financial Guidance and Claims Bill is well-advanced in the Lords – it gets a third reading today – and is due to get to the Commons early next year. It will move the regulation of the claims management sector from the Ministry of Justice to the Financial Conduct Authority; a measure likely to take effect well into 2018 or perhaps even later. It is also worth noting that the Government has committed to amending the Bill – when it gets to the Commons – in order to ban cold-calling for claims leads. While the overall approach is both necessary and sensible, getting there has taken far too long given that this regulatory tightening was first suggested in the March 2016 review of the claims management sector but won’t bite until at least three years after that. [Contrast that with the far quicker approach to tackling abuses in holiday sickness cases, where we expect fixed costs controls to kick in from April 2018.]

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A “slight Nelsonian wink” about the discount rate?

There has been a good deal of media coverage recently about possible legislation to change the present discount rate of -0.75%. While this may well have been generated by briefings by insurers and others it is worth noting, however, that there is no concrete progress towards that as yet.

The House of Commons rises tomorrow (20 July) and nothing is going to happen over the summer break, save that the Ministry of Justice may publish the synthesized results of its latest discount rate consultation which began just after the new rate had been set and which closed in mid-May.

That consultation indicated that the Government would publish the results by 3 August, but the date could slip a little due to the general election and the change of Lord Chancellor and Secretary of State for Justice, with David Lidington replacing Liz Truss.

Speaking yesterday in the Lords, MoJ Minister Lord Keen said that “an announcement of the Government’s conclusions will be made at the earliest possible opportunity … the interests of all parties concerned will be considered, and there will be an impact assessment.​” Progress of sorts, perhaps, but the deliberately equivocal phrase “at the earliest possible opportunity” is far from a commitment by the Government to a clear timetable. His remarks came during a short debate (50 minutes) on a ‘motion of regret’ about the change to -0.75%. The motion is just a device to probe for views.

There was little new in the brief debate, although a few speakers indicated that they thought that the yet-to-be-published Civil Liability Bill should be how legislative reform in this area is taken forward. We had said on the day of the Queen’s Speech that such an approach looked quite likely, given the Government’s widely-drafted summary of the Bill (see blog post here). Lord Keen did not deal with this point directly, but a Peer commented: “I thought I got a slight Nelsonian wink that we might expect some developments in this ​area.”

Certain parts of the intervention of former MoJ Minister Lord Faulks QC show his views to be quite close the general thinking among insurers that the link between the personal injury discount rate and ILGS is no longer appropriate and that a new approach to the notional investment of damages, and hence the discount rate, is needed. He said: “There may be some internal mathematical integrity about the exercise, but it bears little relation to the proper approach to the assessment of damages … I suggest that the approach to the proper measure of damages, looking to the future, should not be on the basis of an entirely risk-free approach – it should be on the basis of a cautious investor, or something of that sort.”

The discount rate remains a key priority issue and one which we continue to monitor closely. We will report on any further developments as and when.


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Alistair Kinley, director of policy and government affairs at BLM