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.
Medical Reports
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.
In conclusion
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.
