03-05-2022

No further reform in motor claims

This blog was co-authored by Taylor Harper, Litigation Assistant, Manchester.

In a surprise to the personal injury sector, the UK Government has ditched plans for further reform of the whiplash claims process.

Background

The Ministry of Justice (MoJ) has recently announced its response to issues within Part Two of the ‘Reforming the Soft Tissue Injury Claims Process’ consultation, expressing no intention to proceed with any further reforms to whiplash claims at this time. 

Part One of the government’s whiplash reform programme primarily dealt with the small claims limit on personal injury claims and the fixed tariff for road traffic accident cases. Part Two of the programme had a much broader scope, dealing with the issue of referrals and qualified one way costs shifting (QOCS), rehabilitation arrangements, credit hire, cost issues and fraudulent claims. However, following the government’s response, it appears the market will be left to deal with these matters.

The suggested addition to the Claim Notification Form (CNF) has been the subject of much discussion for the last five years since the Insurance Task Force put forward their recommendation to the government for more transparency to the claims process. However, the implementation for further reform to the process has been dropped from the agenda by the government, who have confirmed the CNF issues will be monitored, but no official action is to be taken.

The whiplash consultation questioned whether QOCS provisions should require the court’s permission for a claimant to discontinue their claim less than 28 days to trial. Stakeholders offered no clear agreement on this point. There were hopes that credit hire and rehabilitation costs would be addressed in the government’s report, but to insurers’ dismay, there has been no intervention on this.

In response to concerns surrounding the use of rehabilitation in all personal injury claims, the government proposed a voucher scheme in an attempt to limit the number of sessions for those requiring treatment, but this proposition had ‘limited support’ from respondents.

What does this mean for fraudulent claims?

We have previously stated our support for the Insurance Task Force’s recommendations and so it is disappointing that some of their useful recommendations have been abandoned.

Whilst the reforms implemented as a result of Part One of the consultation have had an immediate effect of reducing the volume and value of whiplash claims, it still remains to be seen how effective the reforms will be in the long-term. In response to the reforms, we are already seeing some claimants and their representatives seeking to avoid the application of the Official Injury Claims (OIC) portal and the whiplash tariff.

Interestingly, a number of solicitor firms were already moving to prioritise credit hire claims over personal injury claims, or to layer claims with additional rehabilitation, in their business model and we expect to see this trend continuing.

The reforms implemented to date demonstrate that if the return on investment is reduced for claimants and others seeking financial gain from the claims process, then the volume of claims is inevitably reduced and the cost to insurers, and then ultimately their policyholders, also decreases.

If the remaining suggested reforms had been implemented, the ability of unscrupulous claimants to “game the system” could have been curtailed to some degree. The insurance industry is therefore left to find a way to ensure that policyholders do not pick up the tab for those who bring fraudulent/exaggerated claims.

Of course, the industry has long done this, and will continue to respond to the threat of fraudulent claims. However, our experience tells us that legislation is the most effective way of curbing the incentive for fraudsters to bring a claim. This feels like an opportunity lost for reducing the possibility of fraud and claim exaggeration.