Posts Tagged ‘road traffic accidents’
Whiplash reform programme: implementation
Way back in March 2019 I noted the enactment of the Civil Liability Act 2018. One of its principal objectives was to introduce a new way of dealing with claims for ‘whiplash injuries’ suffered when a car is hit from behind, causing those in the front car to suffer whiplash. It had been planned that the new scheme would come into operation in April 2020. The Government has now announced that it will commence on 31 May 2021.
The Whiplash Reform Programme provides, among other things that:
- A fixed tariff of compensation will determine the personal injury damages claimants will receive for whiplash injuries. Until now, most whiplash claims are determined by negotiation rather than by a ruling from a judge. The tariff – set by the Lord Chancellor – will in future decide the issue. The levels of compensation will be reviewed by officials every three years.
- There will be a ban on settling whiplash claims without medical evidence. It was argued that, in the past, insurance companies paid out on small claims which had been made without any supporting medical evidence because it was not financially worth their while to resist them. The effect of paying out on unmeritorious claims was to increase the costs of motor insurance, to the detriment of motorists who did not make unwarranted claims.
- A new online official Injury Claim Service will be established which will enable claimants to source medical reports to ensure claims are supported by medical evidence before settlement.
- The Small Claims Track (SCT) limit for Road Traffic Accident related Personal Injury claims will be raised from £1,000 to £5,000. This means that the majority of such claims (which are for sums under £5,000) will no longer be subject to fast track rules, where the recovery of legal costs operates on the ‘loser pays’ principle but will be allocated to the SCT, where parties are responsible for paying their own legal costs.
It is hoped that the introduction of the Official Injury Claim Service which has been designed to provide claimants with a user-friendly digital system, supported by guidance, will enable all claimants, particularly those without legal representation, to make and settle their own claim pre-court. It is also hoped that the new system will stop unmeritorious claims from being made.
Since these changes are expected to result in insurance companies being able to reduce their overhead expenditure on motor insurance, insurers are required to provide to demonstrate that they have passed any savings on to customers.
Further information on the new scheme is at https://www.gov.uk/government/publications/whiplash-reform-programme-information-and-faq
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.
Changing the small claims track
In November 2015, the Government announced that it planned to increase the small claims limit for personal injuries to £5000. Following a consultation on making reforms to soft tissue injury claims (often referred to as whiplash injury) the Government has now (March 2017) decided that while Road Traffic Accident claims for less than £5000 should stay in the small claims track, the small claims limit for other personal injury claims should become £2000. It plans that these new limits should be in effect by October 2018.
The Government is also intending to ban the settlement of whiplash claims unless medical evidence is provided of the alleged injury.
For details see https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/593431/part-1-response-to-reforming-soft-tissue-injury-claims.pdf
Dealing with whiplash injuries: the Prisons and Courts Bill 2017
For some time the Government (under pressure from the Insurance industry) has been concerned about the numbers of claims and the aggregate amount of those claims for minor injuries arising from Road Traffic Accidents.
Between November 2016 and January 2017 the Government consulted on a package of measures to tackle the continuing high number and cost of whiplash claims and their impact on motor insurance premiums.
The Government’s concern was that the volume of road traffic accident related personal injury claims has remained static over the last three years and is over fifty per cent higher than 10 years ago (460,000 claims registered in 2005/06 28 compared with 770,000 in 2015/16) despite a reduction in the number of road traffic accidents reported to the police and improvements in vehicle safety, for example better head restraints.
It was noted that similar improvements in vehicle safety in other jurisdictions have led to a reduction in both the number of claims and motor insurance premiums.
The Government’s view is that the continuing high number of low value claims increases the cost of motor insurance premiums, paid by motorists in England and Wales. The Government has set out its view that the level of compensation paid to claimants for these claims is also out of proportion to the level of injury suffered. It has therefore decided to introduce measures to disincentivise minor, exaggerated and fraudulent claims.
Part 5 addresses this matter.
Clause 62 enables the Lord Chancellor to specify in regulations, in the form of a tariff, the damages that a court may award for pain, suffering and loss of amenity (“PSLA”) for relevant whiplash injuries sustained in road traffic accidents, in those cases where the duration of the injury does not exceed or is not expected to exceed two years. The tariff will provide for an ascending scale of fixed sum payments with the relevant tariff for a particular case identified by reference to the severity of the injury. Regulations may specify different sums for different descriptions of injury.
There will be power to deviate from the tariff in exceptional circumstances.
Clause 64 bans regulated persons (basically solicitors and barristers, legal executives and alternative business structures) from making or accepting a payment in settlement, or inviting, or offering to settle an RTA related whiplash claim without appropriate medical evidence.
Whether these changes will actually lead to any reduction in insurance costs is currently hard to determine, particularly given other recently announced changes that may result in a general increase in awards of damages for personal injury.
Martin Partington: Introduction to the English Legal System 15th ed 2021
Oxford University Press Learning Link Resources
Martin Partington: Spotlight on the Justice System 