The government has announced there will be a delay in the reforms being made in the law around road traffic accident injury claims. These reforms were first announced in 2015 and were expected to be implemented through a Civil Liability Bill by April 2019. This has now been postponed for a further year until April 2020, with large-scale testing expected to begin in October 2019.
Raising the Small Claims Court Limit
The are numerous changes in the works, but arguably the most significant is the plan to raise the small claims court limit from where it is currently set at £1000, up to £5000 for whiplash claims and £2000 for other injuries. As legal costs are not usually awarded in this court, this would mean that more people are likely to have to make claims on their own, and for more serious injuries than ever before, as they would otherwise have to cover the cost of legal representation themselves.
I am particularly concerned about accidents where the liability is disputed by the other party’s insurers, and individuals have to prepare their case alone against the resources and expertise of insurance companies. Solicitors are not only experienced with dealing with these cases and insurance companies, but are also able to cover the cost of any expenses such as medical reports that are needed for a claim. Individuals may not want to or be able to afford these up front, and might not be able to pursue valid claims for which they deserve to be compensated because of this.
The Justice Select Committee’s concerns led to their recommendation that the limit be raised only to £1,500, reflecting inflation’s rise since 1999. This was not accepted by the government, who consider £5,000 a proportionate figure, saying that claims of less than £5,000 are “relatively minor and straightforward and are not so complex as to routinely require a lawyer”.
From my personal point of view, the unprecedented 500% jump is certainly going to make it harder for genuine claimants with “minor” injuries to receive the damages they are due. I believe a safer option would be to raise the £1,000 limit over time in stages, based on ongoing evaluations of the impact and effectiveness of the reforms.
I consider the increase to be at least partly indicative of the influence and lobbying power of the insurance sector. This makes me even more worried about the capability of ordinary members of the public to contend with insurers and ensure they are held to account if necessary, especially when having to manage the claim on top of the responsibilities and pressures that already occupy our daily lives.
Whiplash Claims Tariff System
In addition to this change, the introduction of a tariff system for whiplash claims will set fixed amounts (up to a maximum of £3,725) for injuries affecting a person for 2 years at most. To put this into context, while the average payment in 2015 for an injury which affected a person for 4-6 months was £2,150, the tariff as currently intended will instead award £450.
There will also be a change to the personal injury discount rate for future loss, but this will only affect more serious injuries and for the sake of brevity, will not be considered in this blog.
Online Personal Injury Claims
The government intends to introduce an online system for individuals to register claims, known as a Litigants in Person Portal. This has been a major area of concern for many when considering these reforms. To quote Andrew Twambley, spokesman for the Access to Justice campaign group: “Creating, testing and implementing new user-friendly technology to deal with injury claims is enormously complex, and the government’s IT track record is dreadful.”
As someone who has had to use IT systems established and maintained by the government in the past, such as for legal aid in family law matters, I wholeheartedly agree with Mr Twambley’s point. In fact, I’m sure that if you would ask some of my colleagues who use these systems on a daily basis, they would say dreadful may even be an understatement!
Will Policy-Holders Really Benefit?
The reforms were proposed to reduce the current cost of insurance claims, which should then save policyholders money by causing insurance premiums to drop. The government has said motorists are anticipated to save on average about £35 per year. However, while some insurers have pledged to pass on 100% of the savings to their clients, a significant proportion of the public do not expect this to be the case. As an example of this, a survey by Consumer Intelligence found 67% of 510 people think companies will pocket the difference and they will not see a change in their premiums.
Certainly nobody would deny that something should be done about fraudulent whiplash claims, and we would all like to pay less for our car insurance. However, I and many others fear the damage these reforms could do to genuine claimants who may struggle to represent themselves, or to afford a lawyer after being injured through no fault of their own.
It may be an uncertain time for the future of road traffic accident claims, but we here at Farleys are always available to provide any advice or assistance that we can. To speak to a personal injury specialist please call 0845 287 0939 or email us through our online contact form.