Industry responds to latest step in whiplash reforms
17th January 2018
There was some long-awaited progress in the area of whiplash reforms this week (16th January 2018) when a Government Justice Select Committee heard evidence from a number of industry experts – from the legal and insurance sectors – that explored the proposed reforms and the impact they might have.
As it stands, the intention is to remove access to solicitors for claims that total less than £5,000, with the intention of reducing fraudulent claims. However, figures suggest that there are actually very few fraudulent claims – and that the £5,000 minimum will impact a far greater number of legitimate claimants.
There were some interesting comments made, both during the select committee hearing and in response to it.
Giving evidence to the House of Commons Justice Select Committee, Jason Tripp, from Coplus operations director, said: “The government’s proposed reforms will have an unintended and very serious detrimental effect on the operation of the before the event (BTE) motor legal expenses insurance (MLEI) market and consequently customers’ access to justice.”
With fewer customers taking out legal cover as part of their policies, insurance industry costs could rise by £250m, which is likely to be passed on to 10 million customers nationwide. It was suggested that the reforms could create a gap in the market for Claims Management Companies (CMCs) to fill – implying they could grow, rather than have their wings clipped by this reform.
Justice minister Lord Keen told the committee that there would be an increase in Litigants in Person (LIPs – ie, people representing themselves in the small claims court). To facilitate this, the small claims court maximum will be raised to £5,000 for soft-tissue RTA claims. He said the system would be made more user-friendly to help facilitate this, but skeptics believe this will just give CMCs more room in which to operate.
Lord Keen said he hoped that the reforms would reduce the number of fraudulent claims by forcing claimants to “pause and think about the merits of their claim before they make it”.
Speaking in response to the latest developments, Motor Accident Solicitors Society chair Simon Stanfield criticised the government’s plans to deprive personal injury claimants of legal representation.
“It is extremely disappointing, but not surprising in the slightest, that the government continues not to listen and is formulating this major reform programme with little or no reliable data or evidence, instead basing it upon some historical assumptions about fraud, in particular from the ABI, that have long since been discredited by all sides in the debate,” he said.
“These reforms will have a very real impact upon hundreds of thousands of innocent accident victims every year and the government must have a better answer to some of the consequences than relying upon an already over-stretched charitable sector to support LIPs navigate a process that they will find complex and hoping that a re-energised CMC market can somehow be contained.”