Martin Partington: Spotlight on the Justice System

First, it changes the rules relating to claims for injury for whiplash (which arise when someone drives into the back of your car).  Measures in the Act will:

• provide for a tariff of compensation for pain, suffering and loss of amenity for whiplash claims. The final tariff will be set in supporting regulations via the affirmative procedure following Royal Assent.
• enable the court, subject to regulations, to increase the compensation awarded under the tariff
• introduce a ban on seeking or offering to settle, whiplash claims without appropriate medical evidence

The purpose of these changes is to try to reduce the cost of motor insurance for motorists in general by reducing the numbers and amounts of such claims.

Second, it makes changes to the way in which what is called the Personal Injury Discount Rate is set. The new rules will

• retain the 100% compensation principle which has long been a central part of the law, but modernise the calculation of the discount rate so that it reflects the reality of how claimants actually invest money. This provides a fairer and better way to set the rate for both parties
• put the process of setting the rate on a statutory footing, with expert independent advice and a requirement for the Lord Chancellor to set it at least every 5 years, giving clarity and assurance to claimants and to those underwriting costs. The regular setting of the rate will ensure vulnerable people suffering life-changing accidents have their compensation adjusted by an up to date rate
• create an independent expert panel, which the Lord Chancellor will be required, from the second review under the new legislation, to consult in relation to the factors he or she may consider in setting the rate. This will bring a wider range of expertise into the process

Thirdly. the Act  requires insurers to provide information to the Financial Conduct Authority so that the government can assess whether they have passed on savings as a result of the Act to their customers.