Stakeholders saw it coming, but yesterday’s (February 27) announcement by the Ministry of Justice that the implementation of the government’s whiplash reform programme would be delayed further was still among the day’s biggest news… and insurers and trade groups have been quick to weigh in.
But first, here’s what Lord Chancellor and Secretary of State for Justice Robert Buckland said in his written statement to Parliament: “The government has given careful consideration to whether implementing the whiplash measures in April remains practical, given the work that remains to be completed. We have listened to the arguments made by both claimant and insurance representative bodies.
“As a result, the government has decided that more time is necessary to make sure the whiplash reform programme is fully ready for implementation. We have always been clear that we need to do this right rather than hastily.”
According to the MP, sufficient time to work with the Civil Procedure Rules Committee (CPRC) needs to be provided. They are putting in place the necessary supporting rules and pre-action protocol, which will be published before the rollout of the reforms.
The delay should also give businesses ample time to prepare for the changes to how small road traffic personal injury claims are managed. In addition, the tariff of damages for whiplash injuries will have to be introduced by laying the statutory instrument in Parliament.
“In the light of this, the government has decided to implement these reforms on August 01, 2020,” stated Buckland. Initially, the implementation was slated for April 2019, before it was moved to the same month this year and subsequently to August.
Meanwhile the Lord Chancellor also revealed that alternative dispute resolution (ADR) will no longer be part of the new Official Injury Claim Service that will be delivered by the Motor Insurers’ Bureau (MIB).
It was also noted that the increase in the small claims track limit will not be applicable to those classified as “vulnerable road users” as well as to children or protected parties – clarification on which has been welcomed by the Association of British Insurers (ABI).
Delay comes as no surprise
Among the first to sound off following the news was AXA managing director of underwriting & technical services David Williams, who wasn’t really surprised to hear about the date change.
“The delay to the reforms has felt like the worst kept secret for some time,” commented Williams. “The longer things went on without clarity on the procedural rules, the less likely it was that the April launch would be achieved.
“At AXA, we support the reforms and have made sure we are as ready as we could be. And had the original date been adhered to, we would have been prepared to offer the help needed to deal with claimants in the new regime.”
Offering full backing for the decision to delay, the AXA executive added: “Giving time now for publication of the tariffs, and refinement of the civil procedure rules, means that the later launch will be a better launch; it gives everyone more time to prepare and make sure they get things right.”
The delay was also expected by legal claims specialist First4Lawyers.
Describing the move “inevitable,” First4Lawyers managing director Qamar Anwar asserted: “The Ministry of Justice has dragged its feet in making the decisions needed to meet the April implementation date.
“What is important now is that the extra time granted by the delay isn’t wasted. The onus is on the Ministry of Justice to ensure all the new rules are published without further delay, and all the outstanding issues with the claims process are settled, to allow businesses on all sides the proper time to prepare.”
For LV= General Insurance (LV=GI) claims director Martin Milliner, not pushing through with the April 2020 rollout is the correct decision. “It’s disappointing that the implementation of the portal has been delayed but with many issues yet to be resolved it’s the right thing to do,” he stated.
Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (ACSO), went so far as to call the news “overdue” while welcoming the later launch of MIB’s portal.
“While the added time seems inadequate, it’s vital that the MoJ uses any breathing space effectively, especially as we still don’t have the official rules,” said the executive director.
Thoughts on ADR and the tariff system
Milliner has other issues in mind, though, with the LV=GI executive calling for immediate resolution.
“The most concerning thing for us is the tariff system,” he noted. “Under the current rules, pain suffering and loss of amenity are looked at in the round with the main injury being the driver of compensation and the minor one being discounted due to overlap, leading to a small increase in the compensation.
“With a fixed low level tariff for the main injury – which is what we’ll have with the new portal – this whole process doesn’t work as it means that someone could get, say, £500 for the whiplash but now a further £1,000 for a bruise or two, which just doesn’t make any sense.
The claims director’s warning is this: “Currently only a third of whiplash claims have other non-tariff injuries but if this issue isn’t resolved, then I can guarantee that when the portal is live everyone will be making claims for bruises and the planned savings will significantly reduce. We urgently need to work through these issues and ensure the portal works in the best way possible.”
As for the issue of ADR, AXA’s Williams conceded it was always going to be a difficult thing to find a workable solution but expressed the insurer’s commitment to contributing to discussions on whatever alternatives need to be considered.
Kennedys Law partner Ian Davies, meanwhile, had this to say: “It is clear that the decision to move away from the ADR solution will put further pressure on the court system.”
For ACSO’s Maxwell Scott, the ADR change seems more like a broken promise.
“In the troubling absence of a process of alternative dispute resolution, when liability is disputed – as is often the case – injured people will either have to give up their claim altogether or go to court,” he explained. “The decision to scrap ADR directly contradicts earlier reassurances given by ministers and regardless of what they say, it will incentivise insurers to deny liability and therefore cut claims costs.
“Ministers still have plenty of explaining to do, as the new plans don’t sound anything like the sort of slick, modern claims process we were promised, and at this stage there’s a high risk of consumer detriment.”
The Association of Personal Injury Lawyers (APIL) isn’t too forgiving either.
“The excuse that an effective way of resolving conflict in the new portal cannot be found is just not good enough,” stressed APIL president Gordon Dalyell. “It treats injured people with contempt. Failure to include an effective and fair way of resolving conflict in the new portal pits the inexperienced individual against the seasoned insurer without a safety net, hoping everything will go without a hitch.”
Optimism… or what’s left of it
Amid the major developments, the Motor Insurers’ Bureau has expressed its unfaltering support for MoJ.
In an emailed statement, an MIB spokesperson told Insurance Business: “MIB will continue to stand alongside the Ministry of Justice to support their August delivery date. The additional time will allow the CPRC to complete its work and provided we have their decisions by early May, and the changes are not too far away from what we’ve built to date, we are comfortable we will be ready for the new launch date.
“The Ministry of Justice has listened to stakeholder concerns about having sufficient time to prepare. This is important and our March seminars next week will provide an opportunity for MIB and the Ministry of Justice to discuss the new delivery timetable in more detail.”
ABI general insurance policy director James Dalton, meanwhile, remains positive as well.
“The insurance industry has designed and delivered an online portal that will allow people to make whiplash claims simply and effectively without the need for legal representation,” commented Dalton. “While it is disappointing that these vital reforms won’t now be introduced until August, the first priority has to be ensuring that the portal works well for consumers from day one.”
Davies added: “For these reforms to have the desired effect of making the compensation system for low-value road traffic claims fairer and more proportionate, the Ministry of Justice must give us every chance to be ready. That means clear decisions, made quickly, with the underlying rules.”
The Kennedys partner believes it’s only then can we “go about making these reforms work for the public.”