The Civil Liability Bill promises a better deal for insurers and consumers, but whatever savings are made will be competed away, while it’s uncertain whether there will be a reduction in their premiums at all, according to ERS claims director Gary Barker.
Writing for the ERS website as the Civil Liability Bill returned to the House of Commons, Barker pinpointed two “fundamental flaws in the logic” behind the whiplash portion of this legislation—that making it more difficult to bring personal injury claims will reduce their number.
Firstly, Barker (pictured) wrote, blaming claims management companies for the UK’s so-called compensation culture may be misguided, as “there is an entrenched belief in our country that the payment is a deserved recompense following a non-fault accident”.
Doing away with “the prospect of having to deal with lawyers, signing documents that confirm a liability for legal costs and all the associated grief that goes with it” with the introduction of a self-service online portal that allows litigants in person to process their own claims without the need for legal representation may have the opposite effect.
“The proposed portal takes that difficulty away,” according to Barker. “As such, reducing friction in the claims process may have the very opposite effect to the one intended.”
Secondly, the Civil Liability Bill proposes a specific definition for ‘whiplash injury’. Barker explained: “The problem with bringing such clarity to the definition is that it makes equally clear the symptoms required in order for a claim not to be covered by the definition, and hence the tariff damages. Lower back injuries, tinnitus and thumb injuries, for example.”
“If a claim does not land in the tariff, then current levels of damages will be paid. Lawyers can retain 25% of the damages they secure for their clients. With average damages at around £2,500, £625 is a significant sum, add to that a cut of any other special damages secured, like hire charges, repair etc. and it’s easy to get to a value of between £1,000 and £2,000 per claim. There is sufficient evidence to at least give credence to the possibility that the number of whiplash defined claims may reduce, but the number of injury claims may not.”
Barker concluded: “The government should be commended for attempting, through the Civil Liability Bill, to get a better deal for insurers and consumers. However, for insurers there is no advantage to a change in the current system as whatever savings are made will be competed away; and consumers may or may not get a reduction in their premiums. If they are unfortunate enough to sustain an injury in a road traffic accident, what faces them is potential confusion, risk and uncertainty.”