Posts Tagged ‘compensation culture’
Civil Liability Act 2018
The Civil Liability Act 2018 makes significant changes to the personal injury compensation system. In outline, it has three principal objectives.
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.
Compensation culture: cutting down ‘whiplash’ claims
Those who argue that a compensation culture has developed in our society – with too many people willing to seek compensation for things that have happened to them – often point to the numbers of claims made for soft tissue injuries occurring in road traffic accidents (RTAs), commonly referred to as ‘whiplash claims’
In 2015, the Government announced that it wanted to reduce the incentives on people bringing whiplash claims. It has now published a consultation paper setting out its ideas in more detail.
The package includes measures to tackle the high numbers of minor RTA related soft tissue injury claims by either:
Measures (a), (b) and (d) will require primary legislation and the government intends to legislate as soon as parliamentary time allows.Measure (c) requires changes to the Civil Procedure Rules (CPR). There will also need to be amendments to relevant Pre-Action Protocols including the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents.
It is argued that these changes could reduce the cost of insurance claims by around £1bn annually.
The Consultation will provoke strong views, and are likely to be fiercely resisted, particularly by those who represent claimants. If implemented, the reforms could also have significant impact on Claims Management Companies.
The outcome of the consultation is not yet clear, nor, importantly is it clear when time for the required legislation could be found. But it is an issue that is unlikely to go away, even if implementation is still some time off.
The Consultation can be found at https://consult.justice.gov.uk/digital-communications/reforming-soft-tissue-injury-claims/
Supporting heroes?
In my book, I consider the question whether there is a ‘compensation culture’. Over recent years, it has been frequently argued that we have become too keen to resort to litigation when things go wrong – on the basis that bad events are other people’s’ fault -, rather than accept that sometimes one is the victim of bad luck. I argue that this view should be challenged – on the basis that research evidence shows that huge numbers of people with potential legal claims in fact do nothing about them – either through ignorance, fear of costs, reluctance to go to lawyers etc.
At the same time, however, advertising campaigns encouraging people to claim when they have had accidents are perceived as encouraging the bringing of unmeritorious proceedings, which in turn can add to insurance costs.
The Government has recently come to the view that the present state of the law has led to people thinking that they should not intervene in emergencies, or run public events, or lead school trips in case they get sued for negligence if things go wrong. And insurance companies have been seen to be charging high premiums which have led to events not taking place.
The Government’s response is the publication of the rather imposingly named Social Action, Responsibility and Heroism Bill 2014-15. It is actually a very short Bill, but one which, if enacted, will require judges to make some rather teasing judgements. Indeed, the outcome of the Bill may be to encourage, rather than deter, the bringing of actions.
The Bill provides that when dealing with negligence claims or claims for breach of statutory duty the courts should to consider:
- whether the alleged negligence or breach of statutory duty occurred when the person was acting for the benefit of society or any of its members (clause 2) ;
- whether the person , in carrying out the activity giving rise to the claim , demonstrated a generally responsible approach towards protecting the safety or other interests of others (clause 3) ;
- whether the alleged negligence or breach of statutory duty occurred when the person was acting heroically by intervening in an emergency to assist an individual in danger and without regard to his or her own safety or other interests (clause 4).
For further information see https://www.gov.uk/government/news/grayling-law-must-protect-everyday-heroes
See also http://public-scrutiny-office.org/bills/2014-2015/social-action-responsibility-and-heroism