An about-turn on whiplash reforms?

Date published

13/10/2016

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While there still appears to be no formal announcement from the Ministry of Justice (MoJ), many sources are reporting that the proposed whiplash consultation including the small claims limit review has been shelved.

The rationale behind the change of heart is still unclear.

The claimant bodies are undoubtedly delighted by the decision, and the Association of British Insurers (ABI) have advised that they are seeking urgent clarification from Downing Street.

In an already uncertain market, the lack of clarity and messaging of the decision creates further issues for all concerned.

Any changes would have been unlikely to have impacted on the insurer-backed ABS claimant firms or those with a formal relationship with insurers. The news is likely to be met with delight at the smaller claimant organisations who would have seen the prospect of a challenge to their business model by a re-emergence of (claims management companies) CMCs and “McKenzie Lawyers”.

While insurers may have projected some costs savings associated with any change in the small claims limit or in a re-definition of whiplash the reality always was that there would be greater operational expenses generated by dealing with litigants in person. Ultimately would the volume of claims have decreased if the consultation had resulted in changes or would the void created simply have been filled by CMC’s and others?

Richard West, Partner, comments: “Such legislation was always likely to be a challenge for the government. It may still be that increasing the small claims track court limit for personal injury claims will deal with the mischief that needs to be tackled. That mischief is one of ever increasing claims numbers alongside an inefficient process for dealing with the majority of such claims. Such a step is now overdue.”

Partner Ian Davies, who advises many insurers on their approach to low value high volume claims handling, adds: “The decision may ultimately be a wise move. Insurers have many challenges ahead of them in a post-Brexit world. The claimant market has undergone significant consolidation recently and a period of calm and dare I even suggest an opportunity for both sides to work together to find a mutually acceptable solution to propose to the government may benefit all sides.”

Does the suggested shelving of these reforms provide greater support for the Lord Justice Jackson-led expansion of a fixed fee structure to higher value cases?

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