The ABI does politics – but only when it suits

Campaign group accuses industry body of trying to have its cake and eat it

The ABI does politics – but only when it suits

Insurance News

By Paul Lucas

The following is an opinion article from Andrew Twambley, spokesperson for Access to Justice.

The ABI has sought to conflate whiplash reform (low value personal injury claims) with lobbying for changes to the discount rate (for large personal injury claims). To do so illustrates how it wishes to ‘do a Boris’ and have its cake and eat it. Let me explain.

The responsibility for setting the discount rate (which was last set in 2001 at 2.5%) was taken out of the Lord Chief Justice’s hands and given to the Lord Chancellor in the 2005 constitutional reforms. In other words, the responsibility for setting compensation levels became political (the Lord Chancellor is a political appointee), as opposed to judicial.

Successive Lord Chancellors failed to change the rates, so insurers have for a number of years benefitted from a failure by government to lower the discount rate to take account of low investment returns, especially following the financial crisis. In bald terms, catastrophically injured people have not received the compensation they ought to have done.

The ABI described the Justice Secretary’s decision cut the rate to -0.75% as “crazy,” but the organisation should acknowledge that if you put these decisions in the hands of politicians, as opposed to impartial judges, you risk the consequences.

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However, to my conflation point.

The ABI is also lobbying hard for reforms to whiplash compensation, and the government has responded to their overtures by tabling proposals (in the recently deceased Prisons and Courts Bill) to set tariffs for minor whiplash injuries far below those currently prescribed by judges through the Judicial College Guidelines.

In other words, compensation for road traffic accident threatens to become a tool for ministers, not judges. The ABI is happy to support politically-driven decisions when it suits their member company financial interests, but when the politicians don’t toe the line, they describe the decision as crazy.

I would also be surprised if the Lord Chancellor, on behalf of the government, is thrilled at the prospect of taking responsibility for setting such tariffs after the criticism meted out to Liz Truss on the discount rate.

The losers in the ABI’s lobbying shenanigans will, of course, be injured people, both seriously injured and non-fault victims of minor road traffic accidents who will lose their historic rights to fair redress.

The preceding article was an opinion piece from Access to Justice. It does not necessarily reflect the views of Insurance Business.

Related stories:
Discount rate reform: Is insurance industry showing “lack of compassion”?
Whiplash reforms scrapped: industry reacts

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