British motorists expecting lower insurance premiums from new legislation designed to bring an end to whiplash compensation culture in England and Wales face the prospect of reduced legal protection in the long term according to some claimants’ groups.
The level of protection afforded to honest motorists may decline if the new reforms come into effect.
The Ministry of Justice is proposing raising the small claims limit for whiplash or all road traffic accidents to £5000 alongside introducing independent medical panels. The move was strongly backed by The Association of British Insurers saying it was “pleased that the government recognises that tough action is needed to protect honest motorists from the UK’s whiplash epidemic.”
In reality the level of protection afforded to honest motorists may decline if the new reforms come into effect. As cited in the Law Gazette last week, whiplash costs are around £2bn a year, equivalent to £90 per motorist. However, with 7% of claims classed as fraudulent, equating to a total of £140,000,000, this would save each motorist only £3.83 from their annual premium.
In return for a potential £3.83 annual saving, the honest motorist’s access to justice would be vastly diminished. The introduction of the small claims limit increase to £5000 will make it prohibitive for solicitors to offer representation as it is simply not cost effective to do so and may force a number of personal injury solicitors either out of the RTA claims sector, or out of business all together. This would leave the honest person on the street left to represent themselves knowing very little about their rights, and the full value of compensation they may be due.
As part of the recommendations, Justice Secretary Chris Grayling speaks of action to “simplify procedures” but it’s unclear how these actions may simplify the process for the 93% of honest claimants who may have to represent themselves in a small claims court.
The MOJ and the ABI’s focus on reducing fraud is to the detriment of the average motorist. Sound bite quotes about increase in claims and tackling whiplash fraud may currently receive positive sentiment from the general public, however, once the public realise what these reforms actually mean for their rights, this sentiment may change dramatically.
Additionally, the MOJ’s plans to reduce RTA portal fixed recoverable costs by 60% in April leaves personal injury solicitors squeezed even further. Our recent survey showed that over 96% of solicitors felt that the reduction is excessive, and 93% felt it would reduce access to justice for injured people.
I urge the coalition government to be realistic when assessing the true value of the portal fee.” David Bott.
In a recent speech, our managing partner David Bott said “I urge the coalition government to be realistic when assessing the true value of the portal fee and assess the fee by reference as to how long it takes a normal high street solicitor to assist an injured claimant. Do not just concentrate on insurer’s costs and consider the needs of the claimant.”
Ian Stark, chairman of the Association of Cost Lawyers was recently quoted in relation to the combined reduction of RTA portal fees and the increase in the small claims limit by saying “access to justice will be the ultimate victim. I see a whole new unregulated industry being created to handle claims below £5000.” He goes on to say “The lack of joined up thinking is also breathtaking. The Government need to pause and think through its approach.”