Personal Injury Brief July 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, the review of the Motor Insurance Directive and Brexit.
The Civil Liability Bill: next stop the House of Commons
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 debate in the Lords was detailed and extensive.
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 now goes to the Commons for its consideration and is expected to receive Royal Assent in autumn 2018.
Post-implementation review of LASPO: call for evidence
The Civil Justice Council held a seminar on 29 June 2018 for the government’s post-implementation review of Part 2 of the Legal Aid, Sentencing & Punishment of Offenders Act 2012. The government asked that the event focused on the key impacts of Part II, whether the reforms have reduced litigation costs and made those costs more proportionate, what the effect has been on access to justice, and any unintended consequences. Speakers included Sir Terence Etherton, Master of the Rolls and Sir Rupert Jackson. 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 Ministry of Justice has made a call for evidence to support the final review by 24 August 2018.
Contact: Clare Johnston
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.
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.
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 ends of 24 July 2018.
Related item: EU motor law: the impact of Brexit for the UK
Contact: Jennifer Harris
Brexit: White Paper expected
Prime Minister Theresa May made a statement to the House of Commons on 2 July 2018 on the European Council Summit that took place last week. May confirmed that the government’s Brexit White Paper will be published next week. She reiterated her commitment to avoid a hard border in Ireland and called on the pace of negotiations to increase to secure detailed proposals for a close partnership to be put before parliament. May also highlighted the key priorities of the European Council summit: migration, and security and defence, and argued for in-depth coordination and communication post-Brexit to ensure such issues are handled in the best interest of the UK and EU. The next European Council summit will take place in October.
Contact: Deborah Newberry