Personal Injury Brief June 2016: market insights

A summary of key developments including Insurance Fraud Taskforce recommendations, raising the small claims track, autonomous vehicles, falling number of deafness claims, post-implementation review of LASPO, riot damage compensation and VAT liability.

Government accepts recommendations of the Insurance Fraud Taskforce

The government has accepted the 26 recommendations made by the Insurance Fraud Taskforce to tackle fraudulent activity ranging from organised or premeditated crime to opportunistic fraud. The final report (published in January 2016) highlighted the particular problem of fraud in relation to low value personal injury claims. The government has stated it will set out in due course how it proposes to implement the recommendations and will seek an update on progress later in the year.

Contact: Martin Stockdale

Related item: Establishing a legacy: Insurance Fraud Taskforce final report

Ministry of Justice to proceed with proposals to raise small claims track

Justice Minister, Lord Faulks has confirmed that the Ministry of Justice (MoJ) intends to proceed with proposals to remove general damages for whiplash claims and raise the small claims limit to £5,000 for all personal injury claims. Speaking at the annual conference of the Association of Personal Injury Lawyers, Faulks said the government plans to publish the consultation after the EU referendum.

Contact: Richard West

Related item: Whiplash: small claims limit to increase to £5,000

Modern Transport Bill announced in the Queen’s Speech

The government confirmed its intention in the Queen’s Speech to legislate on insurance requirements for driverless cars. It has outlined its plan to retain compulsory motor insurance and extend it to cover product liability, so that where the vehicle is at fault, the insurer will be able to seek reimbursement from the manufacturer. A government consultation is due in summer 2016 on close-to-market technologies, with a view to amending the regulatory regime and addressing longer-term legal implications. Meanwhile, Volvo has outlined its UK-based test, ‘Drive Me London’, which is due to begin in early 2017 with a limited number of semi-autonomous driving cars.

Contact:  Niall Edwards

Related item: Autonomous vehicles: the pathway ahead

Falling number of deafness claims

Figures published by the Institute and Faculty of Actuaries’ UK Deafness Working Party showed that the number of claims received by insurers fell throughout 2015 - from 22,079 in the first quarter to 14,274 in the last. Those totals were respectively 20% higher and 7% lower than the same periods the year before. PwC predicted that claims volumes could continue to decrease, stating, “The latest figures would seem to support the view that these claims have reached the point where the pool of eligible claimants is shrinking”. The outcome of the Civil Justice Council’s review into the imposition of a fixed costs regime for deafness claims remains outstanding.

Contact: Cameron Clark

New working party to review civil litigation

A new Civil Litigation Review Working Group has been set up to consider and review a series of discrete topics relating to civil litigation. The initial focus will be on:

  • Hot-tubbing of experts.
  • The role that before the event insurance might play in improving access to justice.
  • Qualified one-way costs shifting and private nuisance claims.

The group will report on each topic as work concludes over the next 18 months to assist the MoJ in its review of LASPO, which is due in early 2018.

Contact: Tracy Head

Riot damage compensation: new scheme ahead

The Riot Compensation Bill 2015-16 has received Royal Assent, repealing the Riot (Damages) Act 1886 and providing measures to cap claims for riot damages at £1 million. It also allows for motor claims for vehicles that are insured but whose policies do not cover riot damage. It now rests with the Home Office to introduce secondary legislation to stipulate the date when the legislation will come into force in full.

Contact: Kathy Dwyer

Related item: Riot damage compensation: opportunity and challenges for motor insurers?

VAT liability: outsourcing of insurance services

The European Court of Justice (ECJ) has decided that the claims handling services provided by a Polish outsourcing company are not exempt from VAT, raising concern for insurers using outsourcing companies that they may face a significant increase in their operating costs. The UK is likely to come under pressure to change its law to align it with European Union law as interpreted by the ECJ (Minister Finansow v Aspiro SA [17.03.16]).

Contact:  Joe McManus

Related item: Outsourcing of insurance services: no VAT exemption