A Bill containing laws which erodes the public’s right to be compensated for the negligence of another party dating back to the 7th Century is close to receiving Royal Assent.
In his Autumn Statement back in 2015 George Osborne announced his plans to shake up Personal Injury law. This came as a shock to many lawyers as the government had already introduced very far reaching reforms in 2013 by way of LASPO, which meant slashing legal costs insurers had to pay by almost 70% and lead to Claimants having to pay a contribution from their own compensation.
The Prison and Courts Bill introduced these reforms which succumbed to the General Election and were later reincarnated via The Civil Liability Bill . These reforms will affect whiplash type claims by introducing a fixed tariff of compensation & also increase the small claims limit from £1000 to £5000 in RTA cases and £2000 in accident at work cases. They will also make changes to the way in which the personal injury discount rate, applied to lump sum awards of damages for future loss, is set.
All this means that thousands of injured people, including children are unlikely to be able to afford legal representation because legal costs will not be payable for claims under £5000 in RTA cases (which currently make up the majority of whiplash type claims).
The sum of £5000 may not seem like much to the Government but to the average person this is a significant sum and their injuries could prevent them working for many months and cause them to even lose their home.
Furthermore, it is likely that compensation for a whiplash type injury will be reduced by around 70-80%.
The Government’s premise for introducing such radical reforms is to facilitate a reduction in insurance premiums and combat fraud . However, insurers themselves have admitted they will only be able to reduce each policy by £35 and they may not even be able to do this due to increases in other costs such as repairs. Insurers have promised savings before, following the last raft of reforms in 2013 yet there is little evidence this has happened.
Furthermore, figures show that in 2017 only 0.22% of claims were fraudulent and between 2007-2016 insurers own data shows the amount paid out on whiplash claims fell by 17% . However, during this time premiums rose by 71%!
Increasing the small claims limit would mean that people suffering injuries that include a collapsed lung, a fractured wrist, or elbow and loss of front teeth, are denied access to justice. These injuries have nothing to do with whiplash yet the Government are penalising Claimants in the same way.
By setting a tariff for RTA whiplash compensation alone we will have the perverse situation whereby someone who suffers a neck injury at work will receive 7-8 times more than someone suffering the same injury in a car and they will be entitled to recover the cost of legal representation whereby the car passenger will not.
The insurance industry saved £11bn since 2013 due to earlier legislation yet now they stand to gain a further £1.3bn per year and a loss to Government coffers of £146m per year all at the expense of the injured person . The NHS will also suffer as currently treatment charges are repaid by insurers yet this will no longer be the case the number of claims reduce.
Another concern is that safety standards in workplaces will drop as irresponsible employers will be aware injured workers will be unable to seek compensation without the help of a lawyer and therefore not bother claiming against them.
The Government have advised somewhat optimistically that the public will not need the help of a lawyer and that they can pursue their claim via an online portal but this is not even in existence yet and doubtful it will be in operation any time soon.
Furthermore, in order to pursue a claim several database searches need to be carried out and various platforms need to be navigated which involve payment of subscription fees. The public will also often have to pay their own costs of obtaining medical & engineer reports and court fees, all which can usually total up to £2000.00.
Even if someone does manage to overcome these hurdles and make an online portal claim insurers can deny responsibility and they will then have to make their own investigations with the Police which again involves payment of fees and gathering witness evidence along with drafting statements and sketch plans.
In our experience, even if insurers admit fault they will then argue their insured driver has not caused any injuries or financial losses and refuse to pay out. In the event they do make some sort of offer how will the public know if this is reasonable and covers all their losses without legal assistance?
Effectively the reforms will create a ‘David v Goliath’ situation whereby the insurers have unlimited resources to instruct the very best lawyers and they will be up against a layperson with no legal knowledge whatsoever attempting to represent themselves . This combined with the system being too complex, time consuming and expensive will mean in reality that people will not want to pursue a claim and justice will unfortunately not prevail.
The reforms will also place a burden on courts which are already overstretched and understaffed due to Government cuts as the public try to navigate their way through the system without any legal assistance.
Overall the reforms do not seem to make any sense yet the Government is intent on pressing ahead with them anyway, despite much opposition in Parliament and a Parliamentary Committee report advising against them.
It is likely that the Civil Liability Bill will come into force in April 2020.