The Justice Select Committee has questioned the rationale behind the Ministry of Justice’s (MoJ) proposed whiplash claim reforms.
In an inquiry this week involving James Dalton, director of general insurance policy at the Association of British Insurers (ABI) and Neil Sugarman, the president of the Association of Personal Injury Lawyers (APIL), Robert Neil, the chair of the Committee, said that the MoJ was aiming its fire at the wrong target in its attempt to tackle fraudulent claims.
“The Ministry of Justice is firing in entirely the wrong direction on this,” said the Conservative MP.
“They’re seeking the ability to restrict general damages for a certain type of tort, whereas in reality they should be knocking these claims companies out of business completely.”
“They’ve ducked that and they’ve failed to have the guts to stand up and really tackle the claims management industry.”
He also asked Dalton if the Government would be wise to change the law on the basis of a suspicion that there was widespread fraud within motor claims, and whether the proposed changes to general damages and the small claims limit would feed through to lower motor insurance premiums.
Dalton said that they would if “all things remained equal” – in a reference to the discount rate – but could not tell the Committee how many of the ABI’s members had promised to lower premiums in the event that the MoJ’s proposals became reality.
Neil’s fellow Conservative MP, Alberto Costa, accused the insurance industry of making a disingenuous link between soft tissue injury claims and fraud and questioned if there was an “epidemic” of fraudulent whiplash claims in the UK.
“Should we as a society not be seeking to enforce existing laws to minimise fraud, rather than attempting to change duties of care that have grown up over decades under our common law system?” asked Costa.
Responding to the hearing, Donna Scully, a partner at Carpenters and prominent anti-fraud campaigner, said that the Committee had clearly agreed that the MoJ’s plans for soft tissue injury claims were misdirected.
“[The MoJ] should return to the original objective, eradicating fraud, not dispensing with age old common law and undermining people’s legal rights,” said Scully.
Simon Stanfield, the chairman of the Motor Accident Solicitors Society (MASS), said: “Bob Neill MP and his Committee posed some fundamental questions around the justification and rationale for the MoJ’s proposals, illustrating why they are ill-considered, misdirected and deeply unfair. We hope that the Committee will now consider it entirely appropriate to pose these questions directly to an MoJ Minister. The Government’s proposals will have far-reaching consequences and should be subject to vigorous examination before they are progressed further.”