The news has been full of the proposals for whiplash reforms set out in the Civil Liability Bill. Pressure for reform has been sought by the insurance industry for many years, with the cost of claims being touted as a reason for increased insurance premiums. It may of course be a coincidence, but rising premiums does seem to coincide with a healthy jump in profits for most insurers. Direct Line saw operating profit for 2017 rise 51% to £610 million. Similarly, Admiral saw pre-tax profits rise 45% to £405 million in the same period.
Back in 2013, the then Master of the Rolls came to the conclusion that the UK was not in the grip of a compensation culture. In fact Lord Dyson viewed the issue as a media-created myth. However, despite this, the current government still use the term ‘compensation culture’ widely to justify the proposed reforms. The insurance industry have advised they will try to pass on the savings, but fall short of making an outright promise. The government’s enthusiasm for the reforms seems even more surprising when their own statistics show claim numbers to be falling. The Department of Works and Pensions records details of the numbers of claims registered, showing a fall in accident at work claims of 15% and for road traffic accidents 18%. Furthermore, cost changes introduced in 2013 by the Legal Aid, Sentencing and Punishing of Offenders Act 2012, which capped the costs for many low value claims at a very low level are still feeding through into savings enjoyed by insurers.
As the Civil Liability Bill makes its way through parliament, a cross-party group of MPs has called for the government to scrap plans to raise the small claims limit for whiplash claims to £5,000.00. If introduced this would see many injured victims of road traffic accidents have to navigate the claims process themselves, against well-funded and well organised insurers. It also remains to be seen whether the damages recoverable for whiplash are going to be capped, as proposed. The current proposals are for damages to be capped for injuries persisting for as long as 18 months. Damages to be capped at levels which would amount to a reduction of between 60% and 90%. For example, the level of damages for symptoms persisting for up to 3 months would be £200.00.
Whilst it is important that fraudulent claims are identified and eliminated from the process, the current proposals go well beyond such an aim and would reduce access to justice for many hundreds of thousands of people annually.