The AA has welcomed the successful passage of the Civil Liability Bill through its third stage in the House of Commons.
The Civil Liability Bill emerged from the House of Commons unscathed earlier this week, after the government defeated Labour attempts to restrict a rise in the upper limit to the small claims track.
Janet Connor, the AA’s director of insurance, said in reaction: “This means that the much-delayed bill, at the third attempt, is now on track to become law in 2020.”
“Of note is that secondary legislation will see the small claims track for minor injuries will be raised from £1,000 to £5,000 for road traffic accident injury claims and to £2,000 or other personal injuries in secondary legislation. This means that legal costs would not usually be awarded for claims below £5,000.”
“This should stop the huge number of cold-call claim firms encouraging people to make claims for injuries they may not even have suffered or for minor aches and pains that ordinarily, they would ignore.”
Connor continued: “The AA’s own research among over 10,000 drivers, shows that nearly two-thirds (63%) say they have received such nuisance calls over the past 12 months, 88% of whom have been called on multiple occasions. Firms often masquerade under the name of respected organisations including one that claims to be the AA.”
“The bill also seeks to cap damages for whiplash claims and ban settlements that are struck without medical evidence, as well as change the way that the so-called ‘discount rate’ for serious, long-term injury is set.”
Connor concluded: “There is no doubt that this bill and its associated secondary legislation will help reduce insurance injury claims costs which are by far the highest in Europe. It’s estimated that it will bring the average cost of an annual car insurance premium down by around £35 by passing on the savings made.”
“According to the AA’s British Insurance Premium Index … the average quoted premium for a comprehensive car insurance policy fell for the fifth quarter in succession, to £628—and has fallen by almost 10% in 12 months, thanks in part to the expectation of savings that would result from the bill.”
“The car insurance industry is extremely competitive—and if savings are made in costs, they will be passed on to customers. Those firms that don’t pass the savings on will lose business.”
“This news should be greeted by drivers as a victory for common sense and put an end to the insidious cold-call claims industry.”
Deborah Newberry, head of public affairs at law firm Kennedys, also welcomed passage of the Civil Liability Bill, saying: “The passing of the Civil Liability Bill will provide compensators some much needed certainly, particularly around the discount rate, and they can now start to take proactive steps to adapting their claims handling models to accommodate the proposed measures.”
“Overall, the reform to the discount rate is to be welcomed—not least as the review mechanism will reflect a real-world approach to how claimants invest their damages. The expert panel as proposed provides comfort that, going forward, the lord chancellor will benefit from receiving independent and authentic advice of investment strategy.”
Despite the positives, Newberry also identified areas that require further work. She said: “For the whiplash measures, the accompanying regulations will, though, need to provide some missing detail around the definition of whiplash injury, and provide some clear guidance to the judiciary as to what circumstances could be considered ‘exceptional’ in order to justify an award uplift.”
“Failure to do so will risk gaming of the system to get around the proposed tariff system or in order to increase the value of a claim, and could create a risk of frictional litigation between parties. It is reassuring however, that the bill does include a mechanism to review the definition of whiplash, but the government will need to keep a close eye on behaviours that seek to exploit the system.”
“Further, the justice minister Rory Stewart is misguided to say that the bill will remove unnecessary complexity, costs and damage arising from the activities of claims management companies (CMCs). Increasing the small claims limit is likely to be viewed as creating a ripe area for CMCs. With that in mind the government should not be lulled into thinking that once the bill is passed that personal injury reform is ‘job done.’”
“The Ministry of Justice, along with the Financial Conduct Authority who will regulate CMCs from next year, will need to stay alive to how the market works in order to prevent fraud and claims farming.”
Opponents of whiplash reform and the Civil Liability Bill expressed their sadness and frustration at the legislation’s passage through the House of Commons.
Vidisha Joshi, managing partner of law firm Hodge Jones & Allen, said: “I am saddened but not surprised that the government refused to budge on the Civil Liability Bill … even when it came to protecting children and other vulnerable individuals from the new regime. Claimant lawyers will, however, continue to make the case to protect their clients and access to justice, and with secondary legislation to implement much of the bill still to be agreed, there remains much to play for.”
Joshi added: “The government should be aware that we as a firm, and many others, will be watching very closely to see if the proposed online portal for claims will actually deliver the experience minister Rory Stewart said [on 23 October]that it should.”
“If history is anything to go by, Ministry of Justice IT projects are not without their issues, as has been seen before with the problems caused by it introducing other systems in personal injury before they were ready. We hope that officials have learned their lesson that rushing implementation to meet an arbitrary deadline does not serve anybody’s interests.”
Qamar Anwar, managing director of First4lawyers, said: “It’s hugely frustrating that the government’s wholesale attack on innocent injury victims remains unchallenged. MPs have let their constituents down by failing to halt reforms that only serve to line the pockets of the powerful insurance lobby.”
“What’s more, the public have no idea what’s coming their way; our own research showed just 18% knew of the government’s plans. That said, the bill can’t be implemented without secondary legislation so the government should be on stand-by that this is not yet a ‘done-deal’. We’ll be refocusing our campaigning efforts now on the secondary legislation.”
“There’s also the added problem of the proposed online portal. The government does not have a happy history in implementing such projects and the likelihood of it being ready for use by thousands of consumers from April 2020 is slim. We’ll be watching this closely and looking for assurances from the government that the portal is fit for purpose from day one. If they can’t guarantee this, then they’ll need to swallow their pride and move the implementation date back.”