George Osborne has said that the Government will remove the right to general damages for minor soft tissue injury claims and will raise the small claims limit for personal injury cases to £5,000.
In his Autumn Statement, the Chancellor has stated that compensation for injuries such as whiplash would be made in medical care, rather than cash. However, the Government has left the option open for claimants to claims for special damages and loss of earnings.
He said that the measures were designed to reduce the cost of motor insurance by an average of £40 to £50 per policy.
A consultation on the small claims limit was postponed earlier this month, but the Chancellor’s move appears to have made it redundant in any case.
The Association of Personal Injury Lawyers’ President, Jonathan Wheeler, was scathing in his assessment of the Chancellor’s actions.
“Only two years ago the Government ruled out increasing the small claims court limit because there were no adequate safeguards to protect genuine claimants,” he said.
“There are still no adequate safeguards. If the small claims court limit is raised to £5,000 all that will happen is that genuine victims of injury will not be able to afford the legal help they need to bring genuine claims and there will be an epidemic of cold calling from claims management companies as they rush to take advantage of vulnerable people who won’t be able to afford legal representation.
He also said that removing the right to damages for pain and suffering would show a “callous indifference” to the suffering of people who were needlessly injured by the negligence of others.
Andy Cullwick, head of marketing for First4Laywers, said that the he hoped that the clampdown on small claims would not “prohibit people’s right to justice”.
“We expect that the move to increase the limit for PI injuries from £1,000 to £5,000 will result in more claimants going for special damages,” he said.
The AA has welcomed the Chancellor’s commitment to tackle fraudulent injury claims which it said were estimated to cost British drivers £2bn per year.
Stephen Gaywood, the AA’s director of counter-fraud, said that the AA had been lobbying for these changes for some years, having first suggested them in 2010 at a time when car premiums increased by over 40% in just one year.
“By giving successful personal injury claimants care such as physiotherapy, which compensation is supposed to pay for, those out to make a fast buck from an injury claim that may not have happened, will immediately be discouraged, “ he said.
“However, those who have genuinely suffered injury will get the treatment they need.”
RAC Insurance director Mark Godfrey said that anything that reduced the cost of car insurance for motorists had to be welcomed. But he urged caution around the saving figure of £40-£50 a year on average policy costs.
“Previous estimates of savings have been overegged,” he said. “The devil, of course, will be in the detail which we wait to see.”
He also said that it was ironic that the announcement had come just three weeks after Insurance Premium Tax was raised by 3.5% to 9.5%.
“Perhaps the Chancellor should have delayed the IPT increase until there is clarity on how these proposals will soften the impact of this increase on motorists,” added Godfrey.