The Transport Select Committee’s (TSC) third report on the cost of motor insurance focuses on the impact of whiplash claims on premiums. The report provides recommendations to the Ministry of Justice after considering evidence from a wide range of interests. ARAG admires the thorough approach of the TSC and endorses many of the report findings. Provided that the Government responds positively, the recommendations should ensure that individuals who have suffered an injury, including whiplash, as a result of a motor accident which was not their fault, will retain access to justice through the small claims procedure.
The UK is not the Whiplash capital of the world
The TSC considered medical evidence about the characteristics and effect of whiplash injuries, accreditation of medical experts, the volume of claims and to what extent whiplash claims are exaggerated or fraudulent. They concluded that 58% of traffic accidents result in whiplash injuries, affecting nearly 477,000 individuals in the last year. This number represents the lowest number since at least 2007-8. The TSC urged the Government to analyse earlier accident statistics and the ABI to provide better data. The committee was not persuaded that the Government’s claim about the UK being the “whiplash capital of the world” could be established from evidence available.
The report expressed surprise that the Government had brought forward measures to reduce fraudulent or exaggerated whiplash claims without having even an estimate of the scale of the problem. ARAG has offices in 15 countries and our evidence supported the TSC’s view. Maybe the Government’s position would have been different had representatives from the legal profession been invited to the PM’s exclusive summit with motor insurers which took place on 14th February? The TSC was disappointed to hear about lack of engagement with the legal profession.
The Committee supported Government proposals for accreditation of medical practitioners (including physiotherapists) and suggested that the Government consider a random audit of medical reports. The Committee felt, that claimants should show some additional evidence to support their claim, whether from a visit to the GP or A&E soon after the accident, or evidence of the impact of the injury on their life. As ARAG deplores exaggerated and fraudulent claims we believe this to be perfectly reasonable.
Reducing the limitation period
As injury symptoms emerge relatively quickly the Committee recommended the Government explain why they were unresponsive to changing the limitation period for road traffic claims below £10,000 from three years to one.
The small claims threshold
ARAG provided comprehensive statements about the negative impact that increasing the small claims track threshold to £5,000 is likely to have on access to justice for motor accident victims. We realise that least well off drivers can be tempted to decline BTE legal expenses cover in order to reduce their premium. The committee was impressed by our argument that expecting individuals to have the capacity, confidence or appetite to instigate claims through the portal is unrealistic. They believed “that access to justice is likely to be impaired, particularly for people who do not feel confident to represent themselves in what will seem to some to be a complex and intimidating process”. They further noted that “insurers will use legal professionals to contest claim, which will add to this problem”.
Our evidence also raised concern about small claims track procedures having the potential to increase the risk of fraud. The TSC noted that procedural implications “could prove counter-productive in efforts to discourage fraudulent and exaggerated claims.”
The committee recommended no change to the small claims threshold until the MOJ had assessed the impact of the Portal.
The TSC asserted that genuine claimants should not be demonised. Again the Committee expressed surprise that the Government had only listened to the insurers’ perspective and found this disappointing in the light of the Government’s own view that the insurers had encouraged unnecessary and excessive claims with their own business models. Insurers were further criticised for making offers in advance of receiving a medical report and for settling claims where fraud or exaggeration was suspected.
The TSC recommended that the Government explain how it will monitor whether or not motor insurers honour their commitment to ensure savings that result from legal reforms are passed through to consumers in the form of lower premiums. Fully recognising the dysfunctional and opaque nature of the motor insurance market the Committee called on insurers to be more transparent about financial and other links in the service chain.
It seems to us that after not being listened to for so long, and even worse being “blamed” for mischiefs in the legal system, the position of claimants has at last been appreciated. We are delighted to see that our submission to the TSC has influenced their report. In particular retaining the small claims threshold at £1,000 will ensure ATE remains a possibility for claimants who have not taken out BTE legal expenses.