What will be the impact of whiplash reforms?

Paper will be published in April and has been welcomed by insurers, but what will the impact be on clients?

What will be the impact of whiplash reforms?

Insurance News

By Paul Lucas

It was back in November that the Ministry of Justice released its whiplash consultation – a move that was met with widespread relief among the insurance industry, but one that created opposition in other circles, as we examined here.

Now, with the final paper set to be published in April 2017, law firm DAS Law has published a white paper examining the potential consequences for clients – stating that while there is a “clear desire to reduce the level of compensation paid to those injured in motor accidents… the overwhelming majority of those injured in an accident will be affected if compensation is reduced and the threshold for the small claims track is raised to £5,000.”

So what are the key points it highlights?

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Small claims track limit
An increase in the small claims limit would remove the ability to claim legal costs for claims with a value below £5,000. The white paper states that this could leave injured parties to either represent themselves, incur the costs of legal representation or completely abandon their claim.

“For many, representing themselves to pursue a claim for compensation will be a daunting prospect against an insurer,” explained Samantha Brown, the author of the report and head of personal injury at DAS Law. “It will involve personally funding the costs of a claim with little or no knowledge of the litigation process. The injured party may be reluctant to take on a well-resourced insurer and their legal representatives.”

The report highlights that if a claim is disputed it will fall under the small claims track process and will require the injured person to collect evidence such as witness statements, a police report or engineering evidence – with fees associated with both of the last two.

They will then face the cost of issuing court proceedings – up to £205 in cases with a value of less than £5,000, and if arguments continue they will face a hearing fee up to £335.

Medical evidence
In addition, the white paper suggests that an injured party will need a medical report to support the injuries – something that is currently funded by legal representatives. This will cost £216.

“An expert may not be able to provide a final prognosis for the injured party’s symptoms,” explains Brown. “Obtaining medical notes and records or diagnostics (such as an MRI scan or X-ray) may be required, the cost of which must be borne by the injured party. A further medical report from the same expert or an alternative discipline may be required.”

In addition, the report highlights potential issues relating to under settlements with “individuals not recovering the amount of compensation that they are entitled to receive,” and that there may be issues relating to special damages, such as loss of earnings. It suggests that there will be even greater emphasis on legal expenses insurance as a result.

“In the absence of legal expenses insurance, the reforms jeopardise access to justice on behalf of the injured party,” it concludes.

The support
When the reforms were proposed back in November, Martin Milliner, claims director at LV= General Insurance, welcomed its introduction.

“Honest motorists and businesses should not have to keep paying the price for unnecessary whiplash claims,” he said in a statement to Insurance Business. “The UK is known as the “whiplash capital of the world” so it’s vital that Government implements these proposals without delay to ensure consumers can start getting a fairer deal as soon as possible.”

His words were backed by Aviva and other general insurers too.

“This is welcome news for consumers who are rightly fed up with nuisance calls, fraud such as crash for cash, and the huge number of spurious whiplash claims they pay for in their premium,” said Rob Townend, claims director at Aviva, speaking to the BBC.

“These proposals bring us a step closer to saying good riddance to the ‘whip-cash’ merry-go-round that is the bedrock of the UK’s compensation culture.”

Your reaction
Now we want to know your opinion on the potential reforms, as insurance professionals? Do you believe the changes are necessary given the claims culture that is apparent in the UK? Or are the measures a step too far and do they risk punishing clients with legitimate claims? Leave a comment below with your thoughts.

Related stories:
Whiplash reforms: the insurance industry reacts
Rising insurance fraud trends revealed

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