Government ignored concerns of Transport Select Committee on whiplash reforms

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The Government pressed ahead with its reforms to RTA-related soft tissue injury claims despite the Transport Select Committee harbouring a number of misgivings about the changes.

The chair of the committee, Louise Ellman, wrote to Lord Keen of Elie QC at the Ministry of Justice, expressing concerns that the she and her colleagues had about the Reforming the soft tissue injury (whiplash) claims process consultation. The MP told Lord Keen in a letter dated 11 January, that although the idea of introducing a tariff for pain, suffering and loss of amenity (PSLA) in soft tissue injury claims could help to depress the number of claims in the area, it  was not specifically targeted at fraudulent claims.

“The Government should demonstrate how the proposals to reduce levels of compensation will deter fraudulent claims while allowing those with a genuine claim to get appropriate restitution,” wrote Ellman.

“Those seeking to make fraudulent claims are likely to try to exploit any tariff or rule that is introduced. If the threshold for a minor injury is set at six months there will inevitably be a large number of claims where miraculously the diagnosis or prognosis will be for recovery in seven months. It is already well known that efforts to reduce fraud can often displace rather than eliminate it.”

She also raised a worry that the reforms were just focussed on whiplash when there are other

elements within the claims process that are liable to fraud. She pointed out that the Insurance Fraud Taskforce had identified repairs and credit hire as areas where fraudulent claims could grow.

Ellman also highlighted a possible unintended consequence of raising the small claims limit, which could see it create a space for claims management companies to get more involved in low value whiplash claims.

“The process of managing a claim through the small claims process, even with a McKenzie friend, will be a daunting prospect for many motorists,” she warned.

“Many will not know where to start and unscrupulous claims management companies may see this as an opportunity. This could undermine the efforts that have been made previously to clamp down on such companies.”

In a letter dated 23 February, Lord Keen told Ellman about the Government’s reforms but did not address any of the points made in her letter.

Instead, he wrote: “The Government is committed to removing the burden of excessive costs on consumers, and believes that these reforms will reduce legal costs and generate significant savings.

“The Government fully expects insurers to pass on the savings from these reforms to consumers through lower premiums, and we will be monitoring the industry’s reaction to these reforms. The Government will consider further action to make sure the savings are passed on if such action is required.”

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Marek Handzel

Marek Handzel is the editor of Claims Magazine. Marek welcomes articles, letters, or feedback from readers and can be reached by emailing marek.handzel@barkerbrooks.co.uk