Motor Brief August 2018: market insights

A summary of key developments including an update on the Civil Liability Bill (whiplash claims and discount rate review), LASPO review, regulation of claims management companies, Scottish civil justice reform and the review of the Motor Insurance Directive.

The Civil Liability Bill

The Bill aims to reform the claims process for whiplash claims and to make changes to the way in which the personal injury discount rate (PIDR) is set. The Bill completed its House of Lords stages on 27 June 2018 and was presented to the House of Commons the following day. The Bill is expected to have its second reading debate on 4 September 2018.

Whiplash: political necessity vs jurisprudential purity

Potential areas of contention include the definition of whiplash and the setting of tariffs for compensation.

Lord Woolf was defeated in his proposal to remove the tariffs set out in the Bill. Those against the proposal argued deciding the tariffs is a political question and not one for the judiciary. The issue of fraud was discussed widely and credit was given to the insurance industry for dealing with fraud and following up fundamental dishonesty.

Discount rate review: repairing the framework

Lords’ amendments changed the period of review to every five years rather than three, with the government accepting that a five-year maximum period could help to reduce the effect of the litigation practice of trying to game the system. The government confirmed it now agrees that the first review should take place within 90 days of the Act being passed and that it will bring forward an amendment in the Commons to developing an effective means for reporting on the savings made by insurers.

The Bill is expected to receive Royal Assent by the end of 2018.

Related Item: Progress at last: Civil Liability Bill brings promise of certainty on discount rate and whiplash reform

Contact: Ian Davies

Small claims limit and online platform – delayed until April 2020

The MoJ has published its response to the Justice Select Committee report confirming delays in implementation by a year to April 2020.

The government is proposing to increase the small claims limit to £5,000 for motor claims and a new online platform to support the anticipated rise in litigant in persons. These reforms will take effect via secondary legislation once the Civil Liability Bill passes into law. The new online platform has been cited as the reason for the delay to allow for large-scale testing to commence in October 2019.

Contact: Mark Walsh

Post-implementation review of LASPO: call for evidence

The Ministry of Justice has made a call for evidence to support its review of the impact of the Jackson reforms. The review is considering the impact of the five statutory reforms in Part 2 of the Legal Aid, Sentencing & Punishment of Offenders Act 2012: non-recoverability of CFA success fees and ATE premiums, the introduction of damages-based agreements, changes to Part 36 offers and the banning of referral fees in personal injury claims. A report will be published by the MoJ later in 2018 drawing on the views of stakeholders and the available data. It would then be for MoJ officials to decide what further actions to take.

The review included a seminar held by the Civil Justice Council on 29 June 2018, at which Sir Terence Etherton, Master of the Rolls and Sir Rupert Jackson attended. The discussion suggested the operation of proportionality and Part 36 could be more clearly defined. A lack of available data about impact was also highlighted. The call for evidence closes on 24 August 2018.

Contact: Richard West

Claims management: regulatory reform

The Financial Conduct Authority (FCA) has published its consultation paper setting out the draft rules and guidance it proposes to make in relation to claims management regulation. Proposals are aimed at strengthening consumer protection, market integrity and competition. The consultation closes on 3 August 2018.

The FCA will become the regulator of claims management companies (CMCs) in England, Wales and Scotland on 1 April 2019 – subject to Parliamentary approval of secondary regulations. At the same time the Financial Ombudsman Service will become responsible for resolving disputes about CMCs.

Related item: Claims management companies: the impact of regulatory reform for the industry and for insurers

Contact: Niall Edwards

Civil justice reform in Scotland: substantial changes afoot

The Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 passed on 5 June 2018, aimed at ensuring litigants in Scotland have a clearer understanding about costs. The key changes include a cap on the level of the success fees and the introduction of qualified one-way costs shifting (QOCS) for personal injury claims. Other changes include with regard to class actions and the regulation of claims management companies. The provisions of the Act are expected to have a phased implementation and the Act allows for a post-legislative review in five years’ time.

Meanwhile, the Damages (Investment Returns and Periodical Payments) (Scotland) Bill was introduced to the Scottish Parliament on 14 June 2018. The Bill makes provision for a different discount rate applied in Scotland, as well as granting courts the power to impose periodical payment orders. The Bill is expected to pass into law by the end of spring 2019.

Related item: How the Expenses Act 2018 will shape the future of personal injury in Scotland

Contacts: Peter Demick and Rory Jackson

Review of EU motor law: call for feedback

On 24 May 2018, the European Commission presented a legislative proposal to amend the Motor Insurance Directive (MID). Aimed at better protecting victims of motor vehicle accidents, the Commission seeks to align the minimum levels of cover by motor insurance across the EU. The proposed rule changes also include the scope of the MID so that it applies to any use of a vehicle as a means of transport, including its use on private properties. The Commission has invited feedback on the proposal and will present a summary of views received to the EU Parliament and Council. The feedback period ended 24 July 2018.

Related item: EU motor law: the impact of Brexit for the UK

Contact: Jennifer Harris

Read other items in the Motor Brief - August 2018