The Chancellor’s Autumn statement packaged a higher limit for small claims with the cessation of legal remedy for soft tissue claims. The stated objective is a crackdown on fraud and claims culture.
Back in February, MP Frank Field asked whether there would be an impact assessment over plans for raising the small claims limit to £5000. Justice Minister Dominic Raab said the government will consult on the detail of the new reforms “in due course, including any necessary safeguards”.
When the impact assessment is published alongside the awaited consultation, the question is whether anyone will be in listening mode.
Although brokers may welcome increases in the small track limit because it reinforces the need for BTE cover, it’s another blow to lawyers. They have had to face a series of changes including the predictable costs regime, online portal, removal of uplift on CFA cases and the prohibition of referral fees. But the real losers are legitimate claimants – the vast majority of people who are substantially disadvantaged following a lower value non-fault injury. They would have to pay their own legal fees in road traffic or other injury claims or more likely, go unrepresented.
According to APIL (Association of Personal Injury Lawyers), typical injuries likely to fall within the proposed limit are crush damage to a hand, collapsed lung, food poisoning causing hospital admission, reconstructive surgery for a fractured cheekbone, minor facial scarring or loss of part of a finger.
None of these is insignificant but the key question is whether the claimant can afford to instruct a legal specialist to pursue a just remedy. And whilst fraud and vulture-like claims management companies undoubtedly exist, the extent of their impact on motor premiums is disputed. Whiplash claims have fallen for the fourth year in a row. According to the government’s Compensation Recovery Unit, the number of whiplash claims fell by more than a third since 2010/2011, yet the insurance industry has not delivered on its promise to reduce premiums – despite buoyant profits.