Will changes to the claims process lead to any consumer benefits?

In November 2015 George Osborne (Chancellor at the time) surprised many in his Budget speech by recommending an increase in the Small Claims Track (SCT) limit for personal injury claims from £1,000 to £5,000 and an end to compensation for `minor’ whiplash injuries.

This, he suggested, would lead to motor insurers reducing premiums for all drivers.

Whiplash has long been a bone of contention, with insurers for many years considering the UK to be the ‘whiplash capital of the world’ therefore stopping these types of claim would massively reduce the insurers outlay for compensation and legal costs.

Raising the SCT limit as above would mean that solicitors acting for Claimants with personal injury claims of a value of less than £5,000 cannot recover their costs from the other side. Accordingly, lay Claimants may have to represent themselves against experienced insurance handlers. Insurers have said that such claims are minor and not complicated therefore Claimants should be able to deal with such matters without legal assistance and cases could be settled quicker and cheaper, however Claimant solicitors have argued that this could lead to Claimants being under-compensated.

Now, 11 months on there has not been any proper consultation with relevant bodies for both sides, although it seems clear that it is a matter of when rather than if they are introduced, particularly for the whiplash proposals, even with the change of PM and Chancellor.

In recent years there have been massive changes to the way personal injury claims are made, including the introduction of a fraud database open to solicitors as well as insurers (AskCue), a Portal for low-value (upto £25,000) claims, reduced costs, making success fees and insurance premiums recoverable from the Claimant rather than Defendant, etc., but this time they are seeking to wipe out a huge swathe of personal injury claims in one go.

It seems to be of general agreement from parties representing both sides (APIL and FOIL) that for many years the SCT limit for personal injury cases should be increased as it has remained at £1,000 for nearly 25 years, but perhaps raising the limit to £5,000 is too high at this stage.

This proposal was previously considered in 2013, but was not implemented after it was argued that genuine Claimants would be unable to claim because they could not afford the legal help needed due to wiping out recoverable legal costs.

This time around insurers are extremely keen to get their proposals through and have suggested that they want to ensure genuine Claimants are still fairly compensated without legal assistance, although how they intend to do so is unclear at this stage.

Additionally, a recent report suggests that despite insurers saving over £500m in whiplash claims from recent changes to the law, these savings have not been passed onto the motorist.

Nathan Clay

Nathan Clay

Nathan Clay
Associate Solicitor
Personal Injury Team
0113 227 9355
NClay@LawBlacks.com
@NathanLawBlacks

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