Motor Brief January 2017: market insights

A summary of key developments including the discount rate review, raising the small claims limit, driverless cars consultation, review of fixed recoverable costs, Vnuk consultation, proposals for transforming the justice system and the Third Parties (Rights against Insurers) Act 2010.

A summary of key developments including the discount rate review, raising the small claims limit, driverless cars consultation, review of fixed recoverable costs, Vnuk consultation, proposals for transforming the justice system and the Third Parties (Rights against Insurers) Act 2010.

Discount rate review: decision delayed until February 2017

The Lord Chancellor has confirmed that plans to publish the results on whether to change the discount rate applied to personal injury claims will not go ahead on 31 January 2017. The announcement is expected in February. The decision follows the legal action taken by the Association of Personal Injury Lawyers challenging the delay in providing a conclusion to the review. Kennedys has urged the government to ensure its decision reflects its own research that personal injury claimants do not simply put their damages into low-risk investments. The earlier research also recognised that even a small reduction in the rate would have a significant impact on public bodies and insurers. Meanwhile, the Association of British Insurers has lost its appeal to bring a legal challenge to the Lord Chancellor’s decision to review the rate.

Related item: Kennedys urges government to reflect reality of investment in discount rate decision

Contact: Christopher Malla

Reforming the claims process: small claims limit

The Ministry of Justice’s long anticipated consultation into reforming whiplash claims closed on 6 January 2017. The government has undertaken to publish its response to the consultation by 7 April 2017. While the proposed measures are aimed at tackling soft tissue injury claims, the remit of the consultation is much broader and includes raising the small claims track for all injury claims. In Kennedys’ response, while accepting that more is needed to manage claim costs, we urge caution about ‘too much too soon’ given the extent of wider reform already on the table. Ongoing dialogue and stakeholder input is vital and the re-engineering the low value Claims Portal is key – all sides have already invested heavily. We have also urged the government to take the opportunity to address the credit hire industry - regardless of the outcome in McBride v UK Insurance Ltd (hearing due on 22 February 2017).

Contact: Ian Davies

Related item: Whiplash consultation full steam ahead

CCAV publishes outcome of consultation on autonomous vehicles

The Centre for Connected and Autonomous Vehicles (CCAV) has published the outcome of its consultation on the pathway to driverless cars, which ran from July to September 2016. Government received a positive response from automotive, road safety, legal and insurance bodies on its rolling programme of reform and focus on near to market technologies. It has amended its insurance proposal and will now extend compulsory motor vehicle insurance creating a single insurer model to protect victims where the autonomous vehicle causes a crash in automated mode. Government will continue policy development around clarifying the applicable framework and will consult again on specific proposals for amendment. Government will bring forward its insurance proposals in the Modern Transport Bill, which is due to enter the Houses of Parliament in 2017.

Contact: Niall Edwards

Related item: Full response to the CCAV consultation

Lord Justice Jackson to review extension of fixed recoverable costs

Lord Justice Jackson is leading a review of fixed recoverable costs (FRC). The review’s recommendations will help to inform a government public consultation on reforms to extend FRC to further areas of civil litigation. The terms of reference include consideration of the value of claims to which such a regime should apply. The call for evidence closed on 30 January 2017. Jackson LJ is to submit his report by 31 July 2017. Meanwhile, the Department of Health has indicated an intention to consult on FRC in clinical negligence claims valued up to £25,000.

Contact: Martin Cox

Related item: Fixed recoverable costs; mixed news for defendants

Vnuk consultation: scope of compulsory motor insurance

The Department for Transport has published its consultation on amending UK law to take into account the ECJ’s ruling on the Vnuk case. The consultation states, “Subject to receiving your opinions, we now regard changing domestic motor insurance law in accordance with an amended Directive as our preferred option”. The consultation document refers to this as “the amended Directive option”. The change to the Directive is still just something that is being considered by the Commission. In addition to the specific amendments raised by the Vnuk case, the consultation seeks views on the approach the UK should take with motor insurance policy once after Brexit. The consultation closes on 31 March 2017.

Contact: Richard West 

Related item: Scope of compulsory motor insurance a loaded gun

Transforming the justice system

The Ministry of Justice has published “Transforming our Justice System”, a paper proposing approximately £1 billion of reforms to the justice system to meet the aim of automating and digitising the entire process of civil money claims in the civil courts by 2020. The proposals seek to speed up resolution by replacing paper and post with digital working and to look at options to extend fixed recoverable costs much more widely. The consultation closed on 27 October 2016. Meanwhile, Justice Minister Sir Oliver Heald has promised a review of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) by April 2018. 

 Contact: Jennifer Harris

Third Parties (Rights against Insurers) Act 2010

The Third Parties (Rights against Insurers) Act 2010 came into force on 1 August 2016. The provisions of the Act make it easier for a third party to bring a claim against an insurer when the insured has become insolvent. The key change is that the third party will only have to issue one set of proceedings, against the insurer. It will then ask the court to make declarations both on the insured’s liability to the third party and the insurer’s liability under the policy. The Act replaces the Third Parties (Rights against Insurers) Act 1930.

Contact: Michael Hogg

Related item: The third parties rights against insurers act 1930 is finally coming into force 

Related item: Political timeline 

Read other items in Motor Brief - January 2017