Martin Partington: Spotlight on the Justice System

Keeping the English Legal System under review

Public expenditure review: impact on the Justice system (2): the future of personal injuries litigation

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A totally unexpected announcement in the 2015 Autumn Statement relates to how personal injuries cases are to be dealt with in future. The statement says (at p 125):

3.103 Motor insurance – The government will bring forward measures to reduce the excessive costs arising from unnecessary whiplash claims, and expects average savings of £40 to £50 per motor insurance policy to be passed onto customers, including by:

••removing the right to general damages for minor soft tissue injuries (Claimants will still be entitled to claim for ‘special damages’, including treatment for any injury if required and any loss of earnings);

••removing legal costs by transferring personal injury claims of up to £5,000 to the small claims court.

This announcement has caused consternation amongst PI claimant lawyers since, by moving many more cases into the small claims track, they will not be able to claim their costs from the insurers when they win. This will result in many claimant lawyers giving up this type of work.

Two consequences seem likely to follow:

First, insurers will be able to put more pressure on claimants to settle on terms dictated by the insurers.

Second, claims management companies may well try to find ways to move in to this work.

Despite the fact that many claimants may end up with a lower level of damages than they might have done had they been represented by a lawyer, many will think that the estimated reduction in insurance premia is a price worth paying to ensure that the costs of small claims are more proportionate than they currently are.

There might, however, be another way of looking at the issue.

In Ireland, the Injuries Board – established by Act of Parliament in 2003 – can deal with all personal injury claims on line. The injured party submits details of the accident and the injury; the insurer makes an offer; and this is assessed by an independent assessor with practical experience of PI and familiar with current trends on the awards of damages by the courts.

There is no compulsion to use the system, but it is free to claimants who win their case, and the services costs much less for the insurers (though still makes an annual surplus).

An analogous scheme already operates in the UK for dealing with tenancy deposit disputes.

The full statement  is downloadable at https://www.gov.uk/government/publications/spending-review-and-autumn-statement-2015-documents.

For the Irish Injuries Board, go to http://www.injuriesboard.ie/eng/

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Written by lwtmp

November 30, 2015 at 12:51 pm

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