- Raising the small claims track limit to £5,000; and
- Removing the right to general damages for ‘minor’ soft tissue injuries.
The proposed reforms are targeted at tackling the compensation culture surrounding minor motor accident injuries with the key aims being to crack down on fraudulent claims and reduce the costs to the motor insurance industry, including the estimated £2bn spent per year on whiplash claims (an average of £90 per motor insurance policy) and the £1bn cost of providing motor insurance as a result. A number of insurers have already confirmed that they will be able to pass on savings of £40-£50 per policy to consumers, in the event that the reforms are implemented.
The reforms have thus far been met by a mixed response, ranging from them being regarded as a ‘significant breakthrough’[i] and a ‘tangible reform’[ii] to ‘undermining ordinary people’s ability to access justice’[iii]. Supporters of the reforms see them as a necessary step required to stand up for the consumer against fraudsters, whilst those who oppose the reforms fear that they will limit access to justice and penalise innocent victims of injury. There is also a worry that the reforms will increase the number of litigants in person in Court whose claims will fall outside of the RTA Portal process and who are unable to afford legal representation, resulting in an increased burden on the Courts. Indeed, such concerns surrounding the safeguards protecting genuine Claimants resulted in the Government ruling out an increase in the small claims track limit only two years ago.
A petition to keep the small claims track limit for personal injury claims to the current £1,000 has been set up and has so far attracted over 21,000 signatories. Should this reach 100,000 signatures, the petition will be considered for debate in Parliament.
The impact of the proposed reforms on the MOJ Claims Portal which itself was only introduced in 2010, is not yet known. However, plans for development in April and December 2016 including the introduction of the User Pays functionality (meaning the Portal will apply a charge to Claimant representatives using the Portal at the point of submitting a new Claims Notification Form) and the ability to transfer claims in bulk between organisations, have been put on hold whilst a Government consultation on the proposed changes takes place in early 2016.
In addition, another of the Government’s reforms on whiplash claims has also been postponed by two months. The MOJ has extended the accreditation deadline for medical experts signing up to the MedCo scheme from 1 February to 6 April this year. MedCo was previously set up in late 2014 as a response to the Government’s call for the random sourcing of medical reports in soft tissue injury claims brought under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents. Following the Chancellor’s Autumn Statement, MedCo were assured by the MoJ that the legal requirement to use their system to source medical reports in such cases has not been changed by the policy decisions announced in the Autumn Statement and the MedCo system remains an integral part of the Government’s reform programme.
The proposed reforms were also due to be considered at the end of 2015 by the Insurance Fraud Taskforce. The Taskforce, which was set up in December 2014 to investigate the causes of fraudulent behaviour and recommend solutions to reduce the level of insurance fraud, with a view to lowering costs and protecting honest consumers’ interests, is expected to give its recommendations for reducing bogus claims in a report any day now. It was previously suggested that the Taskforce would also re-examine the three year limitation period for making a whiplash claim as a result of the MoJ being pressed to commit to a 12 month threshold for such a claim being presented. In addition, there have been calls for the Government to require Claimants to seek medical help within a week of an accident to be eligible to make a claim, possibly another point for the Taskforce’s consideration.
CommentIt has yet to been seen whether the reforms proposed in the Autumn Statement will tackle fraud and reduce insurance costs in the manner envisaged. However it is clear that, in the short time since the reforms were announced, they have sparked much debate and already had an impact on pending developments to personal injury claims handling. Whatever the outcome, it is apparent that changes to the compensation culture are at the forefront of the Government’s mind and it is no doubt inevitable that claims handling in lower value and soft tissue injury type claims is yet again facing a marked transformation.