Motor Brief market insights – May 2019

A summary of key developments including an update on the Civil Liability Act 2018 and the whiplash reforms, LASPO review, the proposed extension of fixed recoverable costs, autonomous vehicles, next steps in the review of the Motor Insurance Directive and amendments to the domestic statutory framework for compulsory motor insurance in the event of a no deal Brexit.

Civil Liability Act 2018 and the whiplash reforms

Report on savings provision

The Civil Liability Act 2018, which received Royal Assent on 20 December 2018, imposes a new statutory requirement on insurers to provide information to the Financial Conduct Authority about claims costs and premium prices. It is proposed that information should be gathered for each of the three years of the reporting period, to be provided in one return, by 1 November 2023. Insurers will be required to report on what they might have expected their costs to have been, without the Act.

A consultation published by HM Treasury on 21 March 2019 invites comments on the suggested approach and the draft regulations which set out the specific information required and the expected methods of calculating this information. The consultation closes on 3 May 2019.

On 29 April 2019 the Association of British Insurers’ reported that figures from its Motor Insurance Premium Tracker show that the average cost of motor insurance in the first quarter of this year was £466 - the lowest quarterly figure since the first quarter of 2017. The ABI report that this in part is likely to be the result of some insurers “passing on expected costs savings in anticipation of the reforms of the Civil Liability Act”.

Unrepresented claimants - government launches consultation on a revised medical reporting process

As part of its whiplash reform programme, changes via the Civil Procedure Rules will be made to increase the small claims track limit for road traffic accident related personal injury claims to £5,000. This change is to be supported by a new IT system/portal, with the aim of enabling unrepresented litigants to progress their own claim.

On 18 April 2019 the government launched a short, focused consultation to seek views on a revised medical reporting process for unrepresented claimants. The consultation closes on 17 May 2019.

Latest update on the new ‘litigants-in-person’ IT portal

On 12 March 2019, Lord Keen of Elie QC, spokesperson for the Ministry of Justice (MoJ), provided an update on progress, explaining that the Motor Insurers’ Bureau has appointed an experienced US-based company, to build and host the new IT system and has engaged Deloitte to provide overarching programme assurance on the delivery of the IT build. Both having started work on the programme in January 2019.

With a commitment from the MoJ to provide regular updates on the implementation programme, these should provide greater clarity on whether what many consider an ambitious target of April 2020, is achievable.

Contact: Ian Davies

Objectives of LASPO fulfilled

The MoJ has concluded that the Part 2 reforms (litigation funding and costs) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) have been successful against their objectives.

Having completed their post-implementation review on 7 February 2019, the government believe that costs have been reduced, that fewer unmeritorious cases are being taken forward and that access to justice at proportionate cost is generally being achieved. No changes to the legislation are proposed.

Contact: Jennifer Harris

Consultation on extending fixed recoverable costs published

On 28 March 2019, the Ministry of Justice launched a consultation on extending the use of fixed recoverable costs (FRC) in most civil cases with a value up to £100,000, as originally outlined in the 2017 Jackson report. The consultation closes on 6 June 2019.

The consultation seeks views on the following changes:

  • The extension of FRC to fast track cases, including package holiday sickness claims, by the creation of four new bands
  • A new process and FRC for noise induced hearing loss claims
  • The extension of FRC to intermediate cases (claims valued between £25,000 and £100,000)
  • Cost budgeting for ‘heavy’ judicial reviews.

Justice Secretary David Gauke stated the proposals support the aim of controlling legal costs in advance of litigation and will provide “certainty and transparency for all involved”.

Contact: Ian Davies

Government must get people talking on autonomous vehicles

In our response to the Law Commission’s preliminary consultation on autonomous vehicles (which closed on 18 February 2019), we confirmed our belief that government need to work centrally to further facilitate meetings and communication between various stakeholders, and in particular between insurers and manufacturers.

We recognise that while there have been some steps from Government to make this happen, a lot more needs to be done if it is to improve underwriting and the provision of insurance for autonomous vehicles. We have also said that the role of the “user-in-charge” - the person operating the controls of the automated vehicle when not in autonomous mode – must be made clear now and cannot wait until the technology further develops.

Contact: Niall Edwards

Related items:

Where next for the EU Motor Insurance Directive (MID)?

A final report on proposed changes to the MID was published by Internal Market Consumer Protection Committee (IMCO) and put before the European Parliament on 13 February 2019, in a vote whether to adopt the IMCO amendments. The amendments included clarification on the definition of “use of a vehicle” to mean a vehicle being used in traffic, both on public and private roads, but not in cases where the vehicle is used exclusively in a closed area with no access from the general public.

IMCO’s proposals were approved (562 in favour, 36 against and 19 abstaining). The next stage is for the matter to return to IMCO for inter-institutional negotiations known as the trilogue. The European Parliamentary elections take place on 23 May 2019 which doesn’t leave much time for the trilogue negotiations before then, however given the significant support of MEPs for the proposals (demonstrated by the vote) this may well help to expedite those negotiations.

Contacts: Jennifer Harris and Joy Middleton

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

Dealing with deficiencies in the statutory framework for compulsory motor insurance if no deal Brexit

Motor Vehicles (Compulsory Insurance) (Amendment etc.) (EU Exit) Regulations 2019

This statutory instrument which was made on 11 March 2019, amending domestic legislation to deal with deficiencies in the statutory framework for compulsory motor insurance, arising in the event that the UK leaves the European Union without a deal.

In doing so, the instrument removes the requirements for the Motor Insurers’ Bureau to act as a Compensation Body for UK residents injured in road traffic accidents in the European Economic Area, and to reimburse its foreign counterparts in respect of EU27 visitors in the UK who have been compensated by their ‘home’ Compensation Body.

Contacts: Jennifer Harris and Joy Middleton

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