Reforming
the Soft Tissue Injury (‘whiplash’) Claims Process
Response
from ARAG plc
Introduction
ARAG plc is a leading legal expenses
insurance provider in the UK. We are
part of ARAG SE, a global leader in legal expenses insurance which generates
annual premium income in excess of €1.5 billion. It has always been our vision
to enable everyone, not just those who can afford it, to assert their legal
rights. With this in mind we provide innovative and affordable Before the Event
(BTE) and After the Event (ATE) legal expenses insurance products to consumers
and businesses.
In particular we insure 665,000
private motorists on whose behalf we pursue 31,500 personal injury claims a
year.
Consultation responses from ARAG plc.
Question 1: Should the (above) definition be used to identify the claims to be
affected by changes to the level of compensation paid for pain, suffering and
loss of amenity from minor road traffic accident related soft tissue injury
claims, and the introduction of a fixed tariff of proportionate compensation
payments for all other such claims?
Please give your reasons why, and
any alternative definition that should be considered.
We agree with the suggested wording
for the definition (which appears in paragraph 23, not paragraph 17) by which
to identify claims for the purpose of potential reforms which may be introduced
pending the outcome of this consultation.
Question 2: Should the (above) definition be
extended to include psychological trauma claims, where the psychological
element is the primary element of a minor road traffic accident related soft
tissue injury claim?
Please provide further information
in support of your answer, including if relevant, how this definition could be
amended to effectively capture this classification of claim.
No, we do not agree that the
suggested definition should be extended. Psychological trauma claims cannot be
properly categorised in the same way as a soft tissue injury.
Question
3: The government
is
bringing forward
two options to reduce
or remove the amount of
compensation for pain, suffering and loss of amenity
from minor road
traffic accident related soft tissue
injury claims.
Should
the scope of minor injury be
defined as duration of six months or
less?
Please explain your reasons, along with
any alternative
suggestions for
defining the scope.
|
It is our view that victim's
compensation should be determined according to the degree of pain, extent of
soft tissue damage and the claimant's expected recovery time – not merely the latter; so that a claimant experiencing
severe pain should not be compensated at the same level as another experiencing
lesser pain where both have a recovery period of six months. Our preference for an alternative proposal
would be to refer to the Judicial College Guidelines for the assessment of
general damages (currently edition 13) (JCG).
It is for the courts to determine a just and fair level of damages, not the
Government.
Question 4: Alternatively, should
the government consider applying these reforms to
claims covering nine months’ duration or less?
Please explain your reasons
along with any alternative
suggestions for defining the scope.
|
For the reason stated in our
response to question 3 we do not support the measures under consideration being
applied to claims covering nine months. An injury that lasts up to nine months
is a relatively serious injury.
Question
5: Please give your views on whether compensation for pain, suffering
and loss of amenity should be removed for minor claims as defined in Part 1
of this consultation? Please explain your reasons.
|
We disagree that compensation for
pain;
suffering and loss of amenity should be removed for minor claims as defined in
Part 1 of the consultation. Individuals who have suffered injuries that
adversely affect their daily lives, due to the fault of a negligent third
party, must be entitled to compensation. It is inconceivable that injured
parties in a traffic accident should lose their right to be compensated while
those who suffer inconvenience with much shorter term effects (e.g. due to
flight or rail delays) are considered more deserving.
Justice demands that the emphasis
should be on assisting innocent injured victims and not minimising costs
incurred by a negligent driver's insurer. The fundamental right to obtain
financial compensation for bodily injury is enshrined in English common law and
dates back to Anglo-Saxon times.
Question
6: Please give your views on whether a fixed sum should be introduced to
cover minor claims as defined in Part 1 of this consultation? Please
explain your reasons.
|
There is no need to introduce an
"arbitrary" figure as JCG (Edition
13) work well to arrive at reasonable levels of compensation. Insurers do not
require certainty on a case-by-case basis as losses are pooled allowing
decisions about settlement offers, reserving and pricing to be made on the
basis of large numbers.
Question 7: Please give your views on the
government’s proposal to fix the amount of compensation for pain, suffering
and loss of amenity for minor claims at £400 and at £425 if the claim
contains a psychological element. Please explain your reasons.
|
We are at a loss to understand
why such low amounts are being proposed and how the figures of £400 and £425
have been calculated given that the current median JCG average is calculated to be £1800.
Question
8: If the option to remove compensation for pain, suffering and loss of
amenity from minor road traffic accident related soft tissue injury claims is
pursued, please give your views on whether the ‘Diagnosis’ approach should be
used. Please
explain your reasons.
|
We do not consider that making
claimants wait for six months will ever be helpful. As the consultation points
out, the delay will act as a disincentive to the majority of claimants who have
genuine injuries. Deliberately delaying notification of claims could result in
·
third parties becoming untraceable as vehicles
get sold on
·
more disputes over liability as the recollection
of events becomes clouded with the passing of time
·
the potential for disputes arising from causation
to complicate claims where an individual is involved in more than one accident
during a six month period or where they develop over time symptoms which may
not have been caused by the accident
·
an unnecessary delay in the injured claimant
recovering non-PSLA losses
·
an increase in the number of claims incurred but
not reported leading to greater uncertainty for underwriters.
It is for insurers to investigate
and prosecute fraudulent claims, rather than to rely on the Diagnosis approach
which will unfairly cause detriment to genuine claimants.
Question
9: If either option to tackle minor claims (see Part 2 of the
consultation document) is pursued, please give your views on whether the
‘Prognosis’ approach should be used.
Please explain your reasons.
|
The options referred to in
question 9 are unfair and unreasonable. Consequently it is irrelevant to
express a view about the Prognosis approach being introduced to work in
conjunction with the Part 2 options.
Question
10: Would the introduction of the ‘diagnosis’ model help to control the
practice of claimants bringing their claim late in the limitation period?
Please explain your reasons and
if you disagree, provide views on how the issue of late notified claims
should be tackled.
|
Claimants are entitled to bring
their claim at any time within a statutory limitation period and any claims
reported within the statutory limitation period are not late.
Question 11: The tariff figures have been developed to
meet the government’s objectives. Do you agree with the figures provided? Please
explain your reasons why along with any suggested figures and detail on how
they were reached.
|
We do not agree with the fixed
tariff figures which compare unfavourably against the JCG amounts. The tariffs proposed are between 22% and 82% of the
JCG figures. Furthermore, we note that the JCG figures are based on edition 12
of the JCG which was introduced in
December 2013. The current edition (edition 13) came into effect from September
2015. The reason for basing proposals on out of date guidelines needs to be
explained and justified. The current JCG
have been devised to deliver fair and proportionate levels of compensation for
PSLA and we would support retaining this level of payments subject to regular
future review.
Question 12: Should the circumstances where a
discretionary uplift can be applied be contained within legislation or should
the Judiciary be able to apply a discretionary uplift of up to 20% to the
fixed compensation payments in exceptional circumstances?
Please explain your reasons why, along with what circumstances you
might consider to be exceptional
|
This question is misconceived.
The judiciary already has discretion within the JCG. The bands are currently wide and flexible.
Question 13: Should the small claims track limit be
raised for all personal injury or limited to road traffic accident cases
only? Please explain your reasoning.
|
We do not support raising the
small claims track limit. Claimants should be able to recover legal advice
costs for claims that exceed £1,000. Any claim valued above this limit is
sufficiently complex to merit legal representation being sought. Under no
circumstances should the consultation be proposing measures beyond its remit
i.e. “to crack down on minor, exaggerated and fraudulent soft tissue injury
(‘whiplash’) claims stemming from road traffic accidents (RTAs)”.
Question 14: The small claims track limit for personal
injury claims has not been raised for 25 years. The limit will therefore be
raised to include claims with a pain, suffering and loss of amenity element
worth up to £5,000. We would, however, welcome views from stakeholders on
whether, why and to what level the small claims limit for personal injury
claims should be increased to beyond £5,000.
|
Question 14 makes an assertion
that the small claims court limit will be
raised to £5,000 – regardless of the outcome of this (so-called) "consultation"
process. This implies a misuse of the process. Respondents are then asked about
our views on increasing the small claims court limit above £5,000. Inflation
since 1991, when the current small claims limit was set, produces an
index-linking factor of 2.01. We would contend that that a reasonable limit to take
into account the effect of inflation would be around £2,000. We are opposed to increasing the limit to
£5,000 let alone any higher limit.
Question 15: Please provide your views on any suggested
improvements that could be made to provide further help to litigants in
person using the Small Claims Track.
|
It is unclear whether the intention is that
uncontested claims between £1,000 and £5,000 will continue to be dealt with
through the personal injury claims portal (but without professional legal help),
or whether the lower threshold for the portal will be aligned to a new small
claims court limit of £5,000 with an alternative (new) system being developed
for claims >£1,000<£5,000? The former seems more likely and is that
scenario that we shall consider.
The portal
was developed by the insurance industry with advice from legal professionals
being expert claimant or defendant lawyers. Personal injury practitioners
process claims forms in bulk and have office facilities at their disposal.
Although the portal provides an efficient way of working for such professionals
it was not designed with consumers in mind.
We consider
the expectation that individuals would have the capacity, confidence or
appetite to instigate claims through the portal following the trauma of an
accident as unrealistic. We envisage genuine claimants viewing the portal as a
significant barrier to bringing a claim.
Disabled individuals, those with learning
difficulty, those for whom English is a second language and anyone falling the
wrong side of the “digital divide” will be most adversely affected and
therefore an equal opportunities impact assessment would need to be undertaken.
Use of the
portal requires some understanding of the procedure rules and contemplates that users will be aware of what they can
claim for and have been sensibly informed of the level of compensation that is
reasonable for their injury. Comparisons may be drawn with the employment
tribunal claims service where self- represented applicants routinely expect
large pay-outs of compensation which are far in excess of sums typically
awarded.
An increase
in litigants in person is another unwelcome consequence for claims handlers.
Such Claimants inevitably take more time and are more challenging to deal with.
We are not aware of any work
having been undertaken to assess how easily individuals are able to understand
the required procedures and engage with the process, or whether they would cope
with the time demanded. The Government does not appear to have based its views
on consumer evidence (such as that gathered from focus groups or consumer
questionnaires) to gauge how confident potential victims feel about pursuing
claims in person. More work should be carried out to properly evaluate how well
individuals are able to manage the process. We believe APIL have carried out a
study on this point.
The expectation
that individuals should conduct their own legal case is likely to add to levels
of post- accident stress suffered by
claimants and it clearly creates an inequality of arms.
If consumers
are required to use the system, it will need to be simplified. Where individuals
struggle with the procedure or have unrealistic expectations, claims are more
likely to fall out of the portal, leading to proceedings being issued in more
rather than fewer cases. It has already been shown in the Family Courts that
litigants in person overwhelm the court system and this is against a background
of court rooms being closed up and down the country.
Question 16: Do you think any specific measures should
be put in place in relation to claims management companies and paid McKenzie friends
operating in the PI sector?
Please explain your reasons why.
|
In our view unqualified and
unregulated McKenzie Friends and unqualified CMCs should be banned.
We disagree with the Government's
view that the majority of injured claimants are confident to be a litigant in
person.
In 2013 the "Transport Committee's fourth report on
the cost of motor
insurance: whiplash" concluded that;
·
access
to justice is likely to be impaired, particularly for people who do not feel
confident to represent themselves and
·
use
of the small claims procedure could prove counterproductive in efforts to
discourage fraudulent and exaggerated claims and
·
that
the proposed reform could create new opportunities for claims management
companies.
It is widely held
that CMCs are to blame for much mischief in the market. Cold-calling activities
and mis-use of personal data has created an unpleasant environment for both consumers
and insurers. The idea that the
Government should encourage the use of CMCs and paid McKenzie friends is
abhorrent.
Question 17: Should the ban on pre-medical offers only
apply to road traffic accident related soft tissue injuries? Please
explain your reasons why.
|
The ban on pre-medical offers is
welcome and should apply to all injuries.
Defendants
have already found it difficult to commercially justify defending a claim under
the QOCS regime. When there is no prospect of recovering costs against an
unsuccessful Claimant, a Defendant is encouraged to make offers of settlement
even where there is a strong Defence in order to avoid incurring further costs.
In this
scenario some claimants (encouraged by CMCs) have recognised that submitting
even a speculative claim could result in an offer of settlement. Defendants
will be faced with the difficult policy decision of either paying these claims,
albeit at a nuisance value level, or incurring unrecoverable legal costs in
defending them.
Pre-medical offers encourage the
fraud and exaggeration that insurers complain about.
Question 18: Should there be any exemptions to the
ban, if so, what should they be and why?
|
There should be no exemptions.
Exemptions to a ban risk creating loop-holes. The ban should be absolute.
Question 19: How should the ban be enforced? Please explain your reasoning.
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The claims notification form
could be designed to have a mandatory field to record key information from the
medical report. The system could then prevent claims being progressed if the
mandatory field is not fully completed. In addition we would suggest a regime
of regulatory or criminal sanctions for parties breaching the ban.
Question 20: Should the Claims Notification
Form be amended to include the source of referral of claim? Please
give reasons.
|
We support this measure as it
will shine a light on pockets of fraudulent activity by CMCs.
Question 21: Should the Qualified One-way
Costs Shifting provisions be amended so that a claimant is required to seek
the court’s permission to discontinue less than 28 days before trial (Part
38.4 of CPR)? Please
state your reasons.
|
No, we do not agree that the
Qualified One-way Costs Shifting provisions should be amended to require that a
claimant is required to seek the court’s permission to discontinue less than 28
days before trial. The introduction of additional rules will catch out
litigants in person. Consent or ex-parte applications will create additional
work for the courts and presumably necessitate a fee which will result in an
additional expense.
Defendants already have the right
to apply to the court to recover costs from claimants where it has been
established that a case is fraudulent. The process needs to be as simple as
possible. Introducing additional obstacles for claimants creates complexity.
Question 22:
Which model for reform in the way credit hire
agreements are dealt with in the future do you support?
a) First Party Model
b) Regulatory Model
c) Industry Code of Conduct
d) Competitive Offer Model
e) Other
Please provide supporting evidence/reasoning for your
view (this can be based on either the models outlined above or alternative
models not discussed here).
|
We prefer the 3rd option
which thanks to the ABI GTA is basically what we already have. There has
been consensual tightening of the existing arrangements since it was launched
and it provides both procedural and financial control. In fact they have
been no rate increases for some considerable time and earlier this year changes
were introduced to reduce the late payment surcharges imposed on the
compensator which resulted in dramatic cost savings for those efficient
insurers able to pay promptly.
It should be made compulsory for all
hire providers and all compensators to be signatories and for all hires to be
provided under its control. A further fillip for the insurer would be to
insist the hire provider was FCA regulated and then both parties would be
obliged to always act in the customer’s best interest.
Any cost savings anticipated by credit hire reforms might
never actually be achieved due to the potential increase in motor insurance
costs if the “First Party Model” was adopted. If the provision of a TRV was to
become a mandatory cover under every motor insurance policy, insurers would be
forced to increase premiums. It has been estimated (admittedly by the CHO) that
the cost of a mobility solution from their own insurer could cost the average
motorist up to £30.00 a year. So much for a reduction of between £3.00 and
£10.00.
It is not clear whether under the “First Party Model”; the
policyholder’s own insurer would be required to provide a like-for-like
replacement, or whether the policyholder would be forced to accept a compromise
on the type of TRV being offered? The existing model allows the credit hire
company to provide a TRV on a like-for-like basis.
Many insurers are quite happy to pass details of their own
non-fault policyholders to credit hire companies and receive significant
referral fees for doing so. Referrals fees of £375.00+ are not uncommon and the
insurers would lose a significant source of risk free income if the “Regulatory
Model” was adopted and referral fees banned as a result.
The “Competitive Offer Model” is simply unworkable and even
by the Government’s own admission “may lead to unnecessary stress and could
result in poor customer satisfaction”. In reality, how quickly would the at
fault insurer obtain its own quote and how long would the arguments between the
insurer and the credit hire company over costs take to resolve, during which
time the non-fault policyholder is left without their own (damaged) car or a
suitable TRV.
It would take time to prepare the primary and secondary
legislation required for the "Regulatory model" which may be
challenging given Government's parliamentary and legislative priorities
following the EU referendum. The Regulatory model is an affront to the free
market economy and would be damaging to business models of insurers and the credit
hire industry and it would ultimately impact on service delivery to drivers.
The Credit Hire Organisation has
said that it will discuss the MOJ’s consultation paper at its annual conference
(held on 24th November). It will be interesting to hear the results
of these discussions and indeed, the CHO’s formal response to the MOJ.
Question
23: What (if any) further suggestions for reform would help the credit
hire sector, in particular, to address the behaviours exhibited by
participants in the market?
Please provide the factors that should be
considered and why
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We have no further suggestions to
make.
Question 24: What would be the best way to improve the way consumers are educated
with regards to securing appropriate credit hire vehicles?
|
Credit hire operators have in
place robust controls to ensure that suitable vehicles are supplied. Consumers
should be able to rely on the hirer's expertise which has built up around case
precedent and within the framework of the ABI GTA.
Insurers should clearly explain
in policy documentation what limits they wish to impose. Contract terms could
allow insurers to limit their liability for third party costs – for example by
imposing co-insurance or an excess or by expressing a weekly or per accident
limit on the sum that can be claimed against the policy. The at- fault driver would then become
responsible directly for uninsured costs.
Question
25: Do you think a system of early notification of claims should be
introduced to England and Wales? Please provide reasons and/or evidence in
support of your view.
|
Comparisons to the notification requirements that operate in
Nordic countries is inappropriate given the differences in the risk environment
in those countries. Furthermore we are unsure of how sound the assertion that "late claims are arguably the claims most
likely to be exaggerated…." (Paragraph 136) actually is and what
evidence is available to support this statement. How long after the occurrence
of an accident is a claim considered to be classified as a "late
claim"? The onus remains with the
insurer to identify and challenge fraudulent claims. Claimants should be able to report their
claim within the statutory limitation period. Reducing the limitation period to
one year for all motor personal injury claims would be an effective brake on
CMCs (and paid McKenzie friends)
engaging in claims fishing activities and in its 2013-14 third session report
(paragraph 40) "Cost of motor insurance: whiplash" the Transport
Select Committee recommend that "the Government explain the rationale
for the three-year limitation period and bring forward recommendations for
reducing it".
Question
26: Please give your views on the option of requiring claimants to seek
medical treatment within a set period of time and whether, if treatment is
not sought within this time, the claim should be presumed to be ‘minor’. Please
explain your reasons.
|
It can be difficult for
individuals to obtain medical appointments so that they may "wish
away" symptoms days after being involved in an accident, in the hope of an
early recovery from injury which is then not available. The introduction of a
time limit during which treatment must be sought (but not necessarily obtained)
would seem to be positive for genuinely injured claimants although what is
reasonable must be carefully considered.
Further work should be carried out to study the behaviour of injured
claimants and based on this to determine a reasonable window of opportunity
following the accident during which medical help is sought before a time limit
is set.
Question
27: Which of the options to tackle the developing issues in the
rehabilitation sector do you agree with (select 1 or more from the list
below)?
Option 1: Rehabilitation vouchers
Option 2: All rehabilitation arranged and paid for
by the defendant
Option 3: No compensation payment made towards
rehabilitation in low value claims
Option 4: MedCo to be expanded to include
rehabilitation
Option 5: Introducing fixed recoverable damages
for rehabilitation treatment
Other:
Please give your reasons.
|
It would
appear that the Government’s main concern with rehabilitation is that it is
providing claimant solicitors with an additional revenue stream and that
referral to rehabilitation providers is driven by financial motives rather than
a genuine attempt to ease the claimant’s pain and speed up the rate of
recovery.
We do not
acknowledge the idea that unnecessary treatment is being arranged in order to
"increase the level of profit derived from a claim." Practitioners
are bound by their own professional rules of conduct. There already is a
Rehabilitation Code in force for many years agreed by both Claimant solicitors
and Defendant Solicitors and insurers. This Code is working perfectly well
already so there is no need to consider other options.
Furthermore
we would be interested to explore any evidence to support the accusation that
rehabilitation arrangements are conducive to fraud.
We do not
agree that it is correct to raise rehabilitation as a problem that requires
remedy, or that it is contributing in any meaningful way to rising motor
insurance costs. In our view there is no inherent problem with the provision of
rehabilitation to injured claimants and whilst there might be some instances of
financial gain being the primary motive for arranging treatment, the vast
majority of claimants who attend physiotherapy are genuine individuals who
receive a meaningful benefit from the rehabilitation treatment that is arranged
for them by the claimant solicitor or CMC.
Question
28: Do you have any other suggestions which would help prevent potential exaggerated or
fraudulent rehabilitation claims?
|
No – We are not aware of any
issue with fraudulent or exaggerated claims.
Question
29: Do you agree or disagree that the government explore the further
option of restricting the recoverability of disbursements, e.g. for medical
reports?
Please explain your reasons.
|
We disagree that the Government
should explore further options for restricting disbursements. Medical reports
are vital to restrict or prevent fraudulent or exaggerated claims. Any
restriction on the recovery of costs will negatively impact on the price
consumers pay for before- the- event legal expenses insurance.
Question 30: A new
scheme based on the ‘Barème’ approach, could be integrated with the new
reforms to remove compensation from minor road traffic accident related soft
tissue injury claims and introduce a fixed tariff of compensation for all
other road traffic accident related soft tissue injury claims. What are the
advantages and disadvantages of such a scheme?
Please give reasons for your answer and state
which elements, if any, should be considered in its development
|
In our view it is completely
unnecessary to consider a fundamentally different system for calculating
damages for injury while a perfectly adequate system currently exists and is in
use i.e. the JCG.
Question 31: Please provide details of any other suggestions where further
government reform could help control the costs of civil litigation.
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Impact
Assessment Questions
1 – Options
Question
1.1:
Do you
agree with
the
range of assumptions made in relation
to
Option 1.1?
If not, please explain why, preferably with
supporting evidence.
Question 1.2: Do you agree
with the range of assumptions made in relation
to
Option 1.2? If not, please explain why, preferably with supporting
evidence.
|
For both options we believe that claimants may also face higher
BTE premiums as a result of increased claims costs. Our provisional (as further
research is required) view is that this would be in the region of £10 + IPT per
vehicle.
Question 1.3: Do you agree
with the range of assumptions made in relation
to
Option 2? If not, please explain why, preferably with supporting
evidence.
|
For both options (excluding non-RTA), we also provisionally (as further research is
required) believe BTE claims costs would increase, leading to premiums
increasing by a further £10 + IPT per vehicle.
Question 1.4: Do you agree
with the range of assumptions made in relation
to
Option 3? If not, please explain why, preferably with supporting
evidence.
|
We disagree with the data (around
60% of CN claims had a total settlement of less than £10,000) supplied by the
NHS Litigation Authority. Our own extensive experience indicates that this
figure should be no more than 30% and indeed we question why a limit of £10,000
is being used when the Consultation proposal relates to £5,000, where our
experience shows that no more than 10% of CN claims would qualify.
We have some doubts as to the main assumptions used for BTE and
non-BTE RTA claimants. Our own extensive experience of BTE buying behaviour
throughout the world concludes that there is a high demand elasticity as
policyholders respond to price increases. We estimate that given that prices
may increase by 50%, demand will reduce by 20%, and not remain the same as
assumed. This effectively reduces the assumed 70% of RTA claimants to around
56% with the residual 14% transferring to other forms of representation
(litigants in person, ATE or Union). This would then make such a cohort 44% of
all claimants with corresponding increases in LiP’s and others who pay for
legal representation.
We do not necessarily agree with the assumption that there would
be a reduction from 29% to 19% for those without BTE insurance. Indeed, even
allowing for an increase in LiP’s which is far from desirable, we still think
that the number will increase from 29%.
It is naïve to think that impact of BTE price increases are
considered secondary when the majority of motorists purchase such cover at
present. A combined view should be adopted instead.
We question how a BTE premium increase of £9 per annum has been
calculated based on £247m increased costs (which in itself is not explained).
The ABI is quoted as insuring 23m vehicles of which 70% are assumed to have
BTE, producing 16m BTE vehicles. £247m divided by 16m vehicles produces an
additional premium of £15, not £9 per vehicle.
Question 1.5: Do you agree
with the range of assumptions made in relation
to
Option 4? If not, please explain why, preferably with supporting
evidence.
|
Unfortunately, we have no information
at this level, though we suspect savings to BTE insurers will be minimal (ie
costs will be similar to Option 3).
Question 1.6: Do you agree
with the range of assumptions made in relation
to
Option 5.1? If not, please explain why, preferably with supporting
evidence.
|
Please see answers to earlier questions.
Question
1.7:
Do you
agree with
the
range of assumptions made in relation
to
Option 5.2?
If not, please explain why, preferably with
supporting evidence.
|
Please see answers to earlier questions.
2 – Pre medical
offers
Question 2.1: From your experience in personal injury claims please provide further information
on the issues raised on
pre-medical offers
in the impact assessment. In particular please
provide any information you
have on the:
i.
current and historical average
volume of claims;
ii. proportion of claims with
legal representation, and separated
by type of legal representation (for example the
proportion
of claimants with
BTE
funded legal representation, the
proportion of claimants with
non-BTE legal representation and
the proportion of claimants
that are litigants in
person);
iii. proportion of claims with
special damages (and separated
by type of special
damages);
iv. current and historical average
settlements (total settlement, PSLA
element, and
special damages element, separately), stratified
by claimant injury durations, if possible;
v.
current and historical average
volume of late claims/how long after the accident the
offer is made/accepted and
the source/origin
of the offers (i.e. offers
made by insurer,
solicitor etc.);
vi. likely change to the above
as a result of
the governments intentions detailed
in the consultation; and
vii. above for road traffic accidents claims, employer liability claims, public liability claims, and
clinical negligence
claims.
|
We are unable to provide this information due to the time deadline
of responding to this Consultation .
3 – Non
RTA
Personal Injury claims
i)
Employers Liability
Question 3.1: From your experience in personal injury claims please provide further information
on the issues raised on
employers’
liability claims in the
impact assessment. In particular please
provide any information you
have on the:
i.
current and historical average
volume and proportion
of claimants with
BTE insurance;
ii. proportion of claims with
legal representation, and separated
by type of legal representation (for example the
proportion
of claimants with
BTE
funded legal representation, the
proportion of claimants with
non-BTE legal representation and
the proportion of claimants
that are litigants in
person);
iii. proportion of claims with
special damages (and separated by type
of special damages);
iv. current and historical average
settlements (total settlement, PSLA
element, and
special damages element, separately), stratified
by claimant injury durations, if possible;
v. current and historical
average volume of late
claims/how long after the accident the
claim is issued
vi. proportion of market
that
has private insurance and
all of the above for claims that currently have
medical
reports, and currently are
pre-medical offers; and
vii. likely change to the above
as a result of
the governments intentions detailed
in the consultation.
|
We are unable to provide this information due to the time deadline
of responding to this Consultation.
ii)
Public
Liability
Question 3.2: From your experience in personal injury claims please provide further information
on the issues raised on
public liability claims in the impact
assessment. In
particular please
provide any information you
have on the:
i.
current and historical average
volume and proportion
of claimants with
BTE insurance;
ii. proportion of claims with
legal representation, and separated
by type of legal representation (for example the
proportion
of claimants with
BTE
funded legal representation, the
proportion of claimants with
non-BTE legal representation and
the proportion of claimants
that are litigants in
person);
iii. proportion of claims with
special damages (and separated
by type of special damages);
iv. current and historical
average settlements (total settlement, PSLA
element, and
special damages element, separately), stratified
by claimant injury durations, if possible;
v. current and historical average volume of late
claims/how long after the
accident the
claim is issued
vi. proportion of market
that
has private insurance and
all of the above for claims that currently have
medical
reports, and currently are
pre-medical offers; and
vii. likely change to the above as
a result of the governments intentions detailed
in the consultation.
|
We are unable to provide this information due to the time deadline
of responding to this Consultation
iii) Clinical Negligence
Question 3.3: From your experience in personal injury claims please provide further information
on the issues raised on
low value clinical
negligence claims in the impact assessment. In particular please provide any information you
have on the:
i.
current and historical average
volume and proportion
of claimants with
BTE insurance;
ii. proportion of claims with
legal representation, and separated
by type of legal representation (for example the
proportion of claimants with
BTE
funded legal representation, the
proportion of claimants with
non-BTE legal representation and
the proportion of claimants
that are litigants in
person);
iii. proportion of claims with
special damages (and separated
by type of special
damages);
iv. current and historical
average settlements (total settlement, PSLA
element, and
special damages element, separately), stratified
by claimant injury durations, if possible;
v. current and historical
average volume of late claims/how long after the accident the claim is issued
vi. proportion of market
that
has private insurance and
all of the above for claims that currently have
medical
reports, and currently are
pre-medical offers; and
vii. likely change to the above as
a result of the governments intentions detailed
in the consultation.
|
We are unable to provide this information due to the time deadline
of responding to this Consultation
77
4 – BTE
Question 4.1: From your experience in personal injury claims please provide further information
on the issues raised on
BTE insurance
in the impact assessment. In particular information
please provide any information you
have on the:
i. current and historical
average level of take
up for RTA claims currently with
medical
reports;
ii.
current and historical average costs of BTE
products; and
iii. likely change to the above as
a result of the governments intentions detailed
in the consultation.
|
i. Not known
ii. Motor BTE average premium has remained
static at approximately £28+ IPT but ranges between £25 to £31 + IPT
Family BTE averages at approximately £25 per policy but typically
varies between £15 to £36 +IPT
iii.
Difficult to predict with any certainty but our provisional view is that
Motor BTE will increase by approximately £15 + IPT and Family BTE will increase
by approximately £5 + IPT
5 – Impact on NHS
Question
5.1:
Do you
have any information on the injury characteristics of individuals who
seek treatment
from
the NHS with
regard to a personal injury claims split by inpatient,
outpatient and those requiring an ambulance called out.
If so, please
provide
details such as type of treatment,
injury length etc.
|
We have no information
6 – Proportion of
insurers saving passed onto consumers
Question
6.1: We would also
welcome views from
respondents on the assumption in the IA
that
85% of insurers savings would be
passed onto
consumers.
|
Firstly, we struggle to understand how Insurers will be able to
discretely identify the savings from these reforms in isolation from all the
other many variables that affect the pricing of premiums. We believe any
savings will be “lost” in the various moving parts that make up pricing.
Secondly, we very much doubt whether Insurers will be true to their word
given their poor experience of honouring past commitments. The insurance
industry promised savings of £90 per motorist pre-LASPOA yet premiums have since
risen by 4% despite 6% fewer claims. The Transport Committee 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. Of some concern is the recent Government acknowledgment that
it is not going to force insurance companies to pass on any savings.
Thirdly, even if such savings could be determined, we fail to
understand why 100% savings cannot be achieved against the assumption of only
85%, leaving Insurers to further profit from victims’ misfortunes. Contrast
this to the assumption that 100% of costs incurred by BTE insurers will be
passed onto customers.
7 – Equalities/Protected
Characteristics
Question 7.1: Do you consider that any of these proposals will
affect
people with protected equality characteristics? If so, please give
details.
|
These proposals will reduce the availability and increase the cost
to injured victims of ATE insurance. ATE policyholders have a high proportion
of low socio-economic citizens who cannot afford the alternative BTE products
sold as add-ons to Motor and Household insurance products. It will be
particularly damaging for non-RTA injury victims where claims are far more
complex and variable.
Question 7.2: Do you consider that any of these proposals impact
on the duty to
have due regard to the need to advance equality of opportunity, by minimising
disadvantages due to
their protected characteristics? If so, please give details.
|
Please see the answer above in 7.1. These proposals will result in
achieving the exact opposite of advancing equality of opportunity for victims
who are currently vulnerable and the most disadvantaged part of society.
Question 7.3: Do you have any
data to support
or disagree with
any of the proposals which
you would like the government to consider
as part of
this consultation?
|
We assume this question is not limited to Equalities/Protected
Characteristics.
We believe the findings of the Transport Committee on the Cost of
motor insurance: whiplash in 2013-14 should form the basis of this
consultation. In particular, we would point out the following conclusions from
that report:
I.
The Committee was not persuaded from the
evidence available that the UK is the Whiplash capital of the world. ARAG has
offices in 17 countries and knows from experience that any comparison of claims
frequencies must be based on road and population density. The fact that the UK
has 79 per cent more vehicles per kilometre than any other EU country and the
most congested roads causes understandably more collisions and claims than
elsewhere (certainly more than Finland which is held up as a credible
comparator in this Consultation).
II.
The impact of LASPOA has had a significant effect
on the number of Motor personal injury claims based on CRU data. This shows
there has been a reduction in claims since LASPOA which should be compared with
the likely increase that would have happened but for LASPOA. The chart below
shows the linear trend line progression of claims since 2013 to portray what
might have happened had LASPOA not been introduced. This shows that
approximately 21% fewer claims
have occurred post-LASPOA, despite
more vehicle traffic increasing.
This reduction should not go unnoticed and confirms that measures
have already been introduced to reduce such claims to already minimum levels.
There is no need to introduce further draconian measures as matters are now in
a steady state and under control.
III.
As injury symptoms emerge relatively quickly the Transport 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. ARAG believes this option should be considered further.
IV.
Not only do we know that least well off drivers can be tempted to
decline BTE legal expenses cover in order to reduce their premium, the
Transport Committee was impressed by our argument that expecting individuals to
have the capacity, confidence or appetite to instigate claims through the RTA
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” producing inequality of arms.
Our evidence also raised concern about small claims
track procedures having the potential to increase the risk of fraud. The
Transport Committee noted that procedural implications “could prove
counter-productive in efforts to discourage fraudulent and exaggerated
claims.”
The Transport Committee recommended no change to the small claims
threshold until the MOJ had assessed the impact of the Portal.
V.
The Transport Committee took the view that access to justice is likely
to be impaired, particularly for people who do not feel confident to represent
themselves.
8 – Small and Micro Business Assessment
Question 8.1: Is your business a
small, micro or medium sized business which
undertakes work in
England and Wales
in support of personal injury claims road traffic
accidents, employer’s liability, public liability or clinical
negligence
claims?
|
ARAG is a medium sized business in the UK which provides BTE and
ATE insurance for all the above types of claims in England and Wales.
Question 8.2: What is your assessment of
the impact
on your business from the reforms
included in this consultation?
Where possible please provide evidence
in support of your comments.
|
ARAG believes there will be a shift of business from ATE to BTE
should the small claims court limit increase to £5,000 with an overall
provisional negative impact on sales of approximately 10%. This will lead to a
reduction in our workforce of a similar proportion.
Should PSLA compensation be removed or limited, ARAG provisionally
forecasts a decrease in sales of up to 90% for Motor risks and 60% for
non-Motor PI risks, resulting in an overall sales reduction of approximately
25% with corresponding decrease in staff numbers.
Reforming the Soft Tissue Injury (‘whiplash’) Claims Process
A
consultation on arrangements concerning personal injury claims in England and Wales
About you
Please use
this section
to tell us about
yourself
Full
name
|
Mr
Tony Buss
|
Job title or capacity in
which you are responding
to
this consultation exercise (e.g. member of the
public etc.)
|
Managing
Director, ARAG plc.
|
Date
|
|
Company name/organisation
(if applicable):
|
ARAG
plc.
|
Sector (e.g. Insurer, Claimant Lawyer, Defendant Lawyer,
MRO, CMC, ABS, Medical
Expert, Representative group, Local
Authority,
Government Department or other):
|
Legal
expenses insurance provider acting on behalf of claimants.
|
Address
|
9
Whiteladies Road
|
Clifton,
Bristol
|
|
Postcode
|
BS8
1NN
|
If you
would like
us to acknowledge receipt of your response, please tick this box
|
(please
tick box)
√
|
Address to
which the acknowledgement
should be sent, if different from above
|
tony.buss@arag.co.uk
|
If
you are a representative
of a
group, please tell us the name of the group
and give
a summary of the people or organisations that
you represent.
79
