The new Government has confirmed that it will press ahead with reform to low value personal injury (PI) cases.
Theresa May’s fragile administration has outlined its plans for PI reform in the Queen’s Speech. Changes to the PI claims sector will be made via the Civil Liability Bill, which the Government has said will crack down fraudulent whiplash claims and is expected to reduce motor insurance premiums by about £35 a year. The Government says that it is part of its campaign to stamp out the UK’s “compensation culture”.
It will ban the settling of claims without medical evidence and will introduce a new fixed tariff of compensations for soft tissue injuries.
With the Civil Procedure Rule Committee expected to raise the small claims limit for PI claims, claimant lawyers reacted with anger to the Government’s plans which they thought had been shelved by the Prime Minister last year.
Tom Jones, head of policy at Thompsons Solicitors said: “This is a desperate government looking for headlines. This will actually take money from the NHS and the Treasury and give it to hugely profitable insurers with no guarantee at all of any return to the consumer.
“There is simply no evidence of a compensation culture: every government report has said it’s a perception, not a reality. The insurers have whipped up a crisis whilst neglecting to mention that they have actually saved over £8 billion since 2010.
“In the last Parliament consumers were going to get a £50 reduction in premiums, yet now we are told the figure will be closer to £35. Another bill, another made up figure. The only guarantee here is that hundreds of thousands of working people are going to have their rights diminished and their access to free legal representation taken away.”
Simon Stanfield, the chair of The Motor Accident Solicitors Society (MASS) said: “We’re disappointed that the new ministerial team at the MoJ have not taken the time to consider the implications of these proposals and work constructively to address some of the practical issues that the proposed legislation throws up. These reforms are unfair and fundamentally flawed in their rationale, and MASS will continue to make this case, whilst seeking to mitigate some of the worst consequences of the reforms.”
The Association of Personal Injury Lawyers’ (APIL) president Brett Dixon, accused the Government of firing at the wrong target.
Dixon argued that insurers had been making savings of £500million a year since the costs in personal injury claims were slashed in 2013. Meanwhile, the cost of motor repairs had risen by almost a third and the insurance premium tax rate had doubled.
“The Government tries to appease motorists but, in reality, their right to redress when they are injured will be diminished in exchange for a promise of lower premiums which will not be kept. I urged the committee examining the proposals in the last session not to be taken in by the hyperbole prevalent in the sector about motor injuries and think how we as a society we would want to deal with someone who has been genuinely injured as a consequence of somebody else’s negligence,” said Dixon.
Qamar Anwar, managing director of First4Lawyers, called upon on the new Lord Chancellor to ensure an honest debate about how personal injury victims are treated.
“We call on the new Justice Secretary, David Lidington to facilitate a meaningful and honest debate about what is right and wrong about how personal injury victims are treated, the way in which insurers operate and the importance of the whole sector coming together to stamp out fraud,” he said.
Donna Scully, director at Carpenters, warned that there were still gaping regulatory holes and unanswered questions about how the reforms would work in practice.
“It appears that the Government has missed an opportunity to engage on agreeing workable solutions and chosen once again to hurtle us down a path that will be predictably bad for the sector,” she said.