In the detailed response to the whiplash consultation – following this morning’s announcement of the headline changes – the Ministry of Justice (MoJ) said that though the small claims limit could be altered sooner through secondary legislation, it would introduce the reforms as a package on 1 October 2018.
It received 625 responses to the consultation paper, of which 56% were from claimant lawyers.
The MoJ said that though many respondents from the claimant lawyer community argued that the numbers of whiplash claims registered with the Compensation Recovery Unit have been falling, further study of the statistics “suggests this is not the case”.
It said differences in claims labelling “may be behind this belief” – when soft-tissue injury claims labelled as ‘neck’ and ‘back’ are considered together with those labelled as ‘whiplash’, the figure increases significantly.
The number of such claims has remained steady over the last three years at around 680,000, which is around 90% of all RTA related personal injury claims made.
The MoJ said: “There are currently substantial financial incentives for claimants to bring cases regarding relatively minor injury, or to exaggerate the severity of their injury, and Government intervention is required to tackle this issue.”
It has become “culturally acceptable” for claims to be made for very low-level whiplash injuries, it added.
The key decisions announced today are:
The reforms will cover RTA-related whiplash claims and minor psychological claims. A definition will be developed to reduce the scope for affected claims to be displaced into other categories of claim.
“The government accepts that the definition should not cover more serious psychological illnesses, for example, depression and post-traumatic stress disorder, which are diagnosable using international standards. The government therefore proposes to limit the scope of this measure to minor psychological injuries, such as ‘travel anxiety’ and ‘shock’.”
“Following consideration of the arguments put forward by respondents”, the MoJ will not remove compensation for pain, suffering and loss of amenity (PSLA) for minor claims and instead intends to pursue a tariff for claims with an injury duration of between 0 and 24 months.
As a result, there is no longer a need to set a definition of what is considered to be a ‘minor’ claim. The tariff will provide two bands for injuries with a duration of up to and including six months.
The tariff will cover both whiplash claims and minor psychological claims, rather than having separate amounts as consulted on. The figures can be seen at the end of this story.
Judges will have the power to increase or decrease awards by up to 20% in ‘exceptional circumstances’. This will not be defined in primary legislation. “Instead we believe it is more appropriate to leave consideration of when a claim is exceptional to the discretion of the courts.”
The small claims limit for RTA-related claims will rise to £5,000, and £2,000 (in line with inflation) for non-RTA PI claims. “We will keep the small claims limit for all PI claims under review and will consider whether a further increase to £5,000 for all PI claims is required in the future.”
“The government is of the view that low-value personal injury claims are not so complex as to routinely require a lawyer. Raising the small claims limit to cover PSLA claims of up to £5,000 will not preclude claimants from engaging legal representation, but would mean that they would in future be responsible for paying for their own legal costs if they so choose.”
“The government accepts that some claimants may not fully understand the process, but this is mitigated by the significant amount of help and support available to all claimants who act in person.”
The MoJ will consider further the suggestions made to help litigants in person, as well as other changes like regulating McKenzie Friends and banning cold-calling.
Banning offers to settle without medical evidence in RTA-related whiplash claims only. The ban will include the making, soliciting, accepting and receiving of such an offer. There will be no exemptions to the ban and it will be a regulatory ban enforced through the relevant regulators as identified in the legislation.
The MoJ’s response to the other issues raised in the consultation paper, such as rehabilitation and credit hire, will be issued “in due course”.
A final version of the impact assessment will also be published shortly and will contain a revised estimate of the expected savings in light of evidence received through the consultation process.
“The government fully expects these savings to be passed on by insurers to consumers and we will be monitoring the impact of these reforms on the cost of motor insurance,” the MoJ said.