Snap election slows reform of injury claims process

Theresa May’s decision to call a snap general election last week has disrupted the Government’s plans to “reform” the bringing of injury claims.

The government’s plan for  changes to injury claims is to increase the small claims limit for road traffic cases to £5,000, to institute a tariff based system for whiplash damages, and to increase the small claims limit for all other claims to £2,000. The planned reforms were part of the Prison and Courts Bill which is yet to go before the House of Lords. The snap general election means that all parliamentary business must be concluded by 3 May 2017 and there is simply not enough time to do it, and thus the bill has been shelved (for the moment).

So, the Bill and the reforms must wait until the country has its say on their next government.  The claimant sector has welcomed the delay hoping it gives a new government an opportunity to reconsider the proposed reforms and to file them away never to be pursued. There is no doubt the reforms will strip away a large part of the injury claims market raising major concerns for many firms.

Surprisingly the insurance industry has not reacted with significant opposition to the delay. This is most probably as they believe it gives them an opportunity to lobby the government on other areas of reform they would like the Bill to deal with, such as a change in the way the discount rate is calculated and Lord Jackson’s likely recommendation to extend fixed costs to higher value cases. They will see this an opportunity to deal with everything at the same time.

If the political pundits are correct and the Conservative government is re-elected it is likely that the delay will be short lived. It will be high on their agenda to push through the bill when parliamentary business resumes. The reforms are likely to proceed with gusto and may be more wide reaching than initially planned, to the significant disadvantage of injured people and their representatives.

In the meantime there will be significant uncertainty especially for catastrophic injury lawyers dealing with claims for significant future losses. The ongoing uncertainty about the discount rate is causing insurers to retreat from settlement negotiations in view of a potential change. What happens next is anyone’s guess.

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