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Statutory review of the whiplash tariff
On 22 May 2024 the Lord Chancellor announced that he had completed his review of the Whiplash Injury Regulations 2021, in accordance with the Civil Liability Act 2018.
Combined with the 17th edition of the Judicial College Guidelines – with a significant increase made in the key areas commonly seen in motor claims – the reviewed tariff is likely to add further to the number of claims exiting the Official Injury Claim process and entering the fast track.
It remains to be seen whether this will lead to proposals to increase the small claims threshold for injury claims.
Taxi-licensing and credit hire claims
We are seeing an evolving trend in credit hire claims involving taxis, where the primary cause for dispute arises from the fact that the driver holds their private hire license with a different authority to where they usually work.
This primary issue is then compounded post-accident when the private hire driver subsequently enters into a credit agreement where the hire vehicle is obtained from a different town or city to their principal location i.e. where they live, work, and critically hold their taxi license.
In applicable cases this has given rise to concerns being made as to the recoverability of hire at all, as they would not have the right to work in the location the credit hire vehicle has been used for.
New Labour government
Reducing claims through road repairs
The new Labour government has committed to additional funding for local authorities to fix up to one million more potholes per year, a commitment welcomed by many local authorities struggling with significant road defects and low repair rates. The ‘pothole crisis’ has increasingly led to a surge in claims and has been a pressing issue for local authorities, drivers and insurers alike. By addressing this problem, Labour hopes to reduce the number of claims related to vehicle damage.
Car insurance costs
The government has also pledged to tackle the “soaring cost of car insurance”, not just through road repairs but also by calling on regulators to address the underlying causes. While details are still forthcoming, it was mentioned at last year’s Labour Party conference that if elected, Labour would direct the Financial Conduct Authority and the Competition and Markets Authority to launch formal investigations into the rising cost of car insurance.
Whilst greater funding towards road repairs and planning reforms may be welcomed, it is important to note that there are several other factors influencing premiums. These include inflation, increased repair costs for new vehicles with advanced technology, modular parts costs, costs associated with sourcing replacement like-for-like vehicles, and related third party credit hire claims, to name a few. As stated by the Association of British Insurers in their Roadmap to Tackle Insurance Costs, it should be a multi-faceted approach taken by firm members, partner organisations, regulators and the government.
Scrutiny by the Financial Conduct Authority
Following the warning issued to insurers by the Financial Conduct Authority (FCA) in December 2022 not to undervalue cars that have been written off, the regulator conducted a survey involving twelve firms which combined represent approximately 70% of the market. The extent to which the outcome of these ‘total loss’ claims are monitored, was among the areas assessed by the regulator,
On 27 March 2024 the FCA published its findings which identified several areas for improvement. With reference to the Consumer Duty, the expectation is that all motor insurers should review the FCA’s findings and will need to demonstrate meaningful engagement, including evaluating their claims handling process(es) to ensure good outcomes for customers.
Increase in indemnity and third-party coverage issues
We are seeing a rise in indemnity and third-party coverage issues likely due to a combination of factors. These include premiums and contributions, usage-based insurance (UBI), changes in procedure, back market (replacement vehicle, credit hire, inflated repair costs etc) mutually increased costs, and inadequate Motor Insurers’ Database (making it hard to identify who is the first motor insurer who stands in front and covers with UBI).
The future of the UK motor insurance market is likely to see continued innovation in UBI products and technology. This and other factors have the potential to create frictional litigation and argument between insurers on which insurer stands in front in terms of third party cover.
Further extension of e-scooter trials
In January this year the Department for Transport (DfT) further extended e-scooter trials beyond 31 May 2024 to 31 May 2026, to build further on the learnings gathered.
Recognising that the trials were launched four years ago, DfT have given “local authorities the opportunity to request changes to the geography and / or fleet size for their e-scooter trials, with a focus on new strategic local objectives.”
With e-scooters capable of causing significant or fatal injury, and/or damage to other road users and adjoining properties, the spotlight remains on how these and other micromobility vehicles should be classified for regulatory purposes.
Automated Vehicles Act 2024: a welcome development for industry
Granted Royal Assent on 20 May 2024, the Automated Vehicles Bill has become law in the UK. Marking an important development towards enabling the safe deployment of self-driving, the Act is legal framework that provides the foundation for a new regulatory and liability scheme for automated vehicles (AVs).
Alongside requirements to provide certain information regarding AV safety, the new Act contains measures of central importance to insurers. Importantly, the Act includes provision for sharing of information held by ‘authorised self-driving entities’ and ‘licensed no-user-in-charge operators’, with private businesses including insurers. Whilst acknowledged as a key matter during parliamentary debates, the detail is not contained in the Act but is expected to follow in secondary legislation - informed by further consultation - and in many respects is crucial to the successful implementation of this technology.
In May 2024 the previous government had indicated that a comprehensive programme for secondary legislation would be launched to build the new regulatory framework. Given the change in government, we may now expect the anticipated programme to be delayed with further details of new consultations or the programme ahead yet to be released.
Case developments
Goyco v Progressive Insurance Co [2024]
On May 14 2024, the Supreme Court of New Jersey held that a plaintiff injured while operating a low-speed electronic scooter did not qualify for Personal Injury Protection (PIP) benefits. The plaintiff sustained an injury when his Segway Ninebot KickScooter Max collided with a motor vehicle.
The Supreme Court was not swayed by the plaintiff’s arguments that his motorized low-speed scooter was equivalent to a bicycle. Instead, the Court held that by its very definition the electronic scooter is a vehicle propelled by other than muscular power (battery-power) and designed primarily for use on highway. Therefore, the plaintiff was not a “pedestrian” for PIP benefits afforded to bicyclists.
Insurance and reinsurance
Public sector
United Kingdom