Who wins in injury claim reforms: the injured, the insured or the insurers?

The current regime of fixed costs for personal injury claims was introduced in July 2013 along with a whole raft of other civil justice reforms. Claims valued no more than £25,000 must be started on an online portal. Claims that remain within the portal attract very limited fixed costs and those claims which fall out of the portal, but continue to be valued at £25,000 or less, attract a separate regime of fixed costs. The small claims limit remained at £1,000, below which no costs can be recovered from the negligent party, which in and of itself is prohibitive for individuals wishing to bring a claim. Unfortunately, the fixed fees regime does not make allowances for complications and difficulties in a claim, often attributable to a difficult insurer as well as a plethora of other reasons. A fixed fee regime that does not allow for necessary further work required due to complicating factors in a difficult case means one of two things: – (1) the work is not done or (2) lawyers end up working for free. This cannot be in the interests of the injured party with a legitimate claim.

It is well known that the government are not finished with civil justice reforms and there are more on the way. Regarding injury claims and the way in which individuals can bring claims, broadly speaking, the government plans to increase the small claims limit for injury cases up to £2,000 and to introduce a tariff based system for whiplash injuries, though such reforms are now to be delayed until the new government is in place after the results of the snap election, see Ian Peters’ article on this.

So, what is the justification for reforms further restricting access to justice? Many reasons have been expounded by the government for the reforms and, certainly, an appetite to utilise technology to increase the efficiency of claims has been a big driving factor. However, it is also true that reforms to injury claims have been, and continue to be, aggressively lobbied for by insurance companies. The narrative, the pervasive and pejorative undertones of which are regularly regurgitated by the mass media, is that such changes are justified and necessary in order to combat the rise of a crisis of a compensation culture, a “whip-cash” industry and the gross increase of fraudulent claims made by dishonest people. Reform must happen, the narrative follows from the insurers, to prevent the increase in insurance premiums paid by honest and law abiding citizens.

So, is there a crisis of fraudulent claims and a ‘compensation culture’ that require curtailment?  From statistics released by the Office for National Statistics on 19 January, insurance fraud reduced by 13% for the year ending September 2016, which would indicate that there is no such crisis. In addition, insurance companies have been criticised in the media for raising premiums with little justification.  On average last year, motor insurance premiums increased by 12%; so, insurance premiums are rising irrespective of the number of claims and in circumstances where fraudulent claims are reducing. Suffice to say, the smokescreen that has been created by lobbying insurance companies is an effective one and one in which they are the winners in the existing and proposed reforms.

Let’s hope that this, presumably brief, hiatus on reforms as a result of the snap election will lead to some measured and responsible decision making by the government (whoever that government may be) with regards to injury claim reforms.

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