Justice Select Committee reports on Discount Rate legislation

 “setting the discount rate is more than a technical decision: it involves balancing the interests of the claimants with the defendants and also balancing the social costs”

Today the Justice Select Committee published its analysis of the draft discount rate legislation. We set out our initial thinking on the report below.

The Committee had been asked to report on this by the end of November, following the Government publishing the legislation in early September.

What happens next is not totally clear. The Government has already indicated that it will respond to the report within two months. On that basis, its plan should be clear by the end of January.

We fully expect the Government to press on with the proposed legislation but to take some note of the Committee’s recommendations about research and clarity on the necessary balance to be struck here between claimants, defendants & indemnifiers and society generally. But it seems to us that a good deal of those issues have been already addressed, for the most part, in the materials published by the Ministry following its consultation.

The tone of the Committee’s report today may be cautious, but from remarks by Ministers in the consultation material and in evidence to the Committee, the Government clearly intends to proceed as promptly as it can. If it is able to respond to this report as planned and to hold to its sense of urgency then we would expect the proposed legislation to be introduced in the New Year and before the Easter recess.

This is a hugely controversial area and it is realistic to expect the Bill to be subject to robust, and perhaps hostile, scrutiny in Parliament. It could still even be the subject of yet another judicial review; which would bring a very real risk of delay if it were to happen.

We shall provide further information as this issue develops.

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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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Commons Justice Select Committee – oral evidence session on whiplash reforms

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.

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