Whiplash reforms, who benefits? Answers on a postcard!!

 

Very few readers will need me to tell them that the so-called reforms of whiplash claims will come into force from 31^st May 2021 and that relevant rules were published on 25^th February 2021. This is the culmination of government plans to effectively wipe out such claims that date back to 2015 when former Chancellor George Osborne announced a total abolition of the right to claim damages for such injuries –

https://thestevecornforthblog.blogspot.com/2015/11/osborne-small-claims-up-to-5k-and-no.html

The tone eventually softened a bit although in many cases the effect will be the same.

For those who don’t know, there will be a two-pronged attack on the rights of victims –

1.       Damages will be subject to a tariff that will see the levels of compensation reduced dramatically. So, for an injury with pain and suffering lasting about 6 months the award is reduced from about £3500 to £495 with a possible increase to £520 if there is a psychological injury. The maximum award for an injury lasting up to 2 years will be £4345.*

2.       The Small Claims limit for RTA cases rises to £5k. This means in effect that no victim will recover legal fees for an injury below that figure. So, you can see that the combined effect is that almost all victims of whiplash injuries will be left on their own to pursue claims without legal help.

There are some limited exceptions and the new rules only apply to accidents after 31^st May 2021. Anyone who has suffered injury after 31^st May 2018 (earlier in the case of children and some people under a disability) will be able to recover full damages. But subject to that modest comfort the effect of this will be to reduce the number of claims that are made.

https://www.legislation.gov.uk/ukdsi/2021/9780348220612?view=plain

There has been much rhetoric from government and the insurance industry about the reasons for the cuts.

The most common is that it is to reduce fraud. Anyone involved in these cases agrees that fraud needs to be eliminated and does untold damage. In fact, most observers agree that the percentage of claims that are fraudulent is exceptionally low. A report by the Association of Personal injury Lawyers (APIL) in 2013 noted that 93% of Road Traffic Cases were genuine. It is generally agreed that the number of claims being brought has declined since then –

https://www.apil.org.uk/files/parliamentary-room/APILwrittenevidence-TransportCommitteewhiplashinquiry.pdf

In a 2020 report the Association of British Insurers talked of a “relentless pursuit of insurance cheats to protect honest customers”

https://www.abi.org.uk/news/news-articles/2020/09/detected-insurance-fraud/

The problem with these reforms is that they have very little impact on fraud. The reality is that an entirely honest victim i.e. one of the 93%+ is going to see their rights removed. These are the very ‘honest customers’ referred to by the ABI.

It is not hard to see who will benefit most from all of this.

Former Court of Appeal Judge, Stephen Sedley QC writing in the London Review of Books this month says -

“Whiplash injuries, dependent largely on subjective accounts of symptoms became a justified cause of concern. But the government’s response has been to use the problem as an opportunity to raise the small claims limit, pushing large numbers of people with genuine claims into a situation where they would not be able to recover any legal costs if they won. They either have to muddle through on their own and very possibly lose a sound case or be prepared to give their lawyers first call on their damages. The principal beneficiary, SB suggests, has been the insurance industry” **

In my 2015 blog I called it – “an all-out attack on victims for the benefit of the insurance industry.”

The benefits to insurers are obvious. They pay out less at a time when claims are reducing. How often have we heard the promise that all of this will lead to a drop in motor insurance premiums? Do any drivers seriously expect this to happen?

These changes are going to happen. But the fight must go on. We are stuck with the present Government for a few years yet but when they are eventually removed this must be a reviewed by whoever replaces them. The problem is of course that many consumers will continue to accept the rhetoric until it affects them.

*there can be a modest increase of up to 20% where an injury is exceptionally severe. Why is any exceptionally severe injury subject a tariff set by politicians?

*London Review of Books Vol 43 No 5 4^th March 2021 – “Mischief Wrought” a review of Fake Law by the Secret Barrister