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Proposed PI Whiplash reforms – how will they affect you?

In November 2016 the Ministry of Justice (MOJ) a Government Department produced a document called ‘Reforming the Soft Tissue Injury claims process’. An announcement by George Osborne in his Autumn statement of 2015 when he was Lord Chancellor suggested that we have an epidemic of fraudulent whiplash claims from accidents. This Consultation asked interested parties to reply so that they can consider how to change the current claims process for inured victims.

It has been suggested that this is needed to reduce minor, exaggerated and fraudulent claims, which in turn would benefit genuine claimants who are currently paying higher Insurance premiums as a result. The government believes that by reducing or banning the making of whiplash claims they can bring down the cost of motor insurance by up to £40.

Unfortunately, the Government will not be bringing in any laws to compel insurers to reduce the cost of premiums. We are concerned that genuinely injured claimants will be deprived of the right to make injury claims or without legal representation and not have any savings passed onto them.

The consultation process on the proposed PI reforms ended early January and Solicitors are bracing themselves for the government’s announcement. It is feared that the proposals will be rushed in based on unbiased, unfair and unvetted data provided by the insurance industry leading to serious unintended consequences to the Country. Depriving the public purse of around 1 billion pounds in taxes only to assist with the profits of insurers.

Lawyers who specialise in this industry, on both sides of the debate table, believe the reforms are unfair to consumers, give the insurance industry and unfair windfall and will cause high level unemployment and tax loss to the country from the legal sector.

The government has discussed banning whiplash claims, whiplash being a soft tissue injury to the spine however; these proposals will affect any person injured in an accident at work, on the roads, in public or private places and in hospitals. They will affect anyone with an injury worth up to £5000.00 and so will deprive thousands of injured people every year that will not be able to seek legal advice or assistance in the way they can now. There will be no drive to keep these areas safe, as the probability of claims for injury being pursued will drop.

Recently the Justice Select Committee chaired by Conservative MP Bob Neill suggested they believe the Ministry of Justice are heading in the wrong direction with these proposals and that they should instead be tackling the issues raised by the Claims Management Companies who try and run such claims and are responsible for the cold calling epidemic the Country is facing which we at Thorneycrofts believe is correct. The Government has not indicated any desire to address CMC’ behaviour or cold calling.

What are the proposed reforms?

There are the 2 main proposals:

1) Injuries deemed minor and that could be suffering of a 6-9 month period do not warrant any compensation. Injuries ought to be set by tariff and the compensatory sum be significantly reduced.

2) Where the injury is worth less than £5000.00 Solicitors should not be involved in the process and injured claimants can bring their claim themselves and negotiate with the compensating insurer. At the moment this value is set at £1000.00. It is known as the small claims limit.

What could the proposed changes mean to you?

Under current laws the amount of compensation you are awarded depends on the severity of your injury and period of suffering If you had a neck injury, that wasn’t your fault, which lasted up to six months, you could receive up to £2600.00.

Under the new proposals, if you suffer from whiplash after an accident for up to 6 months and can prove it, you could get nothing or you could receive £400 or possibly £425 if there is psychological damage.
According to government data, the average compensation received in minor road traffic accidents is £1,850 so the reforms will affect the 1 million or so people every year who pursue claims for being injured.

If the Governments PI reforms go through, then there may be problems finding a solicitor to act for you in any field. Many law firms will not be able to act for clients as the client will not be able to afford the Solicitors legal fees as their damages will be too low to enable the Solicitor to deduct their legal costs from them, the Insurers will no longer be obliged to meet legal fees. It is probable many Law Firms will simply close down meaning it will generally be harder to find a Solicitor to act for you in any area as Personal Injury work tends to the main source of income of a lot of firms.

A spokesperson for the Law Society spokesperson commented: ‘Raising the small claims limit runs the very real risk that the already swamped courts will be flooded with self-represented litigants, causing the inevitable delays that come with that. Of equal concern is the likelihood of a growing number of those who need treatment may be put off making a claim when they have a genuine injury. They will be the walking injured, literally.

‘The onus here surely has to be on insurers. They need to do more to challenge false claims properly and their reasons for not doing so are flimsy to say the least. The government’s plans seem to be geared towards squeezing everyone – including those who suffer genuine injury – except the insurers.’
Any PI reforms that are given the go ahead will be implemented by the end of 2017 and beginning of 2018.

We as a firm are committed to fighting these changes so that we can continue to provide our clients with the client care we are known for. We are contributors to the Access 2 justice fighting fund and support an alternate proposal that would reduce fraud, keep legal costs down and not penalise innocently victimised claimants.

We are concerned if Solicitors exit this market place that Claims Management Companies will step into the void and this will lead to an increase in less than genuine claims and a spike in cold calls. Solicitors are obliged to act to the highest ethical code which means the unintended consequence of the governments plan could make things worse and not better for injured people and anyone blighted by cold calling.

If these proposals are brought in it will mean:
• Less safe roads, work places and roads.
• 1 million people a years damages being reduced by nearly 75%
• Loss of Revenue to the Country of £538 million from the Legal Sector alone
• Loss of Revenue to the Country of £915 million from Legal Sector and supporting businesses
• Loss of Revenue to the Exchequer from Personal firms related to Personal Injury £886 million
• Spending of Legal Sector Employees in the economy – £468 million
• Potential of spike in unemployment in the North West
• Injured people having to represent themselves to obtain evidence to diagnose their accident related injuries arrange their own treatment and negotiate with insurers to recover their damages.

Please see below examples of claimants that have with our help received a higher settlement from the third party insurers then the initial offer.

 

Initial OfferSettlement
Claimant A£1,250£4,300
Claimant B£3,100£4,000
Claimant C£3,025£4,000
Claimant D£2,500£4,615

 

We offer a free initial interview in order to review your specific circumstances and assess the viability of your whiplash claim.

To speak to one of our specialist team call us now on FREEPHONE 0800 1979 345, or complete our simple enquiry form and we can call you back at a time to suit you.