31/07/2018
The Claims Portal was established in 2010, dealing only with claims in road traffic accidents (RTA) valued up to £10,000. Now in its eighth year, the Portal has been extended both vertically and horizontally – covering low value personal injury RTA, employers’ liability and public liability claims up to £25,000.
The Portal was introduced as part of Lord Young’s reforms to curb whiplash claims. Claim numbers did not reduce as anticipated, and we find ourselves once again on the brink of further changes attempting to cut the number of whiplash claims.
In light of this we have reviewed the past 12 months of RTA Portal activity and consider how claims are likely to evolve in the future, whilst having one eye firmly on the ongoing civil justice reforms.
Working well
This past year saw a decline in the number of claims submitted to the Portal. With that context we also see:
All this means that parties (claimants and defendants) are settling a greater proportion of claims within the Portal process, which would indicate that the process works well for all.
Damages on the rise
There has been an increase in the level of average general damages for pain, suffering and loss of amenity (PSLA) recovered from claimants.
In 2010 average damages were £1,637 – almost half the current average. However, when looking at explanations, you must tread carefully not to draw incorrect inferences from data.
We know the information from the Portal is limited, however, looking at the wider context there are likely to be several contributory factors to explain this increase, which include:
What will contribute to continued damages inflation into 2019 and beyond? Our experience suggests that the following factors will be significant:
Behaviours and gaming the system
There are increasing instances where parties are failing to follow Portal rules, which is having an unwanted impact upon the level of costs being paid. For example:
Some claimant law firms continue to diversify with linked companies being established to offer additional services such as credit hire, rehabilitation, and medical reporting. Whilst referral fees for personal injury claims are banned there is no current restrictions on the payment of referral fees for these additional services.
Impact of the ‘whiplash reforms’
On the nature of injuries
Many commentators have suggested that simply adding additional (minor) injuries to a “whiplash” claim would be a tactic deployed by those wanting to operate outside of the proposed tariff system mooted as part of the Civil Liability Bill.
We are already starting to see this in claims being presented now and, despite the recent announcement of delays to whiplash reforms until April 2020, this trend is likely to continue given the government’s determination to see the Bill carry through all of its proposed measures.
On fraud
A tariff system will deliver control of damages inflation and operational efficiencies, but in itself will unlikely make the process less attractive to fraudsters.
It will inevitably result in more cases settling and make settlement easier. That is, of course, part of the plan. However, compensators will need to understand how this has the potential to make it more attractive to fraudsters who prefer to stay under the radar with lots of low risk easy wins.
Making a low value personal injury claim is already quite straightforward. To a fraudster, the process of completing a claims notification form is simply an application for cash. It is easier than applying for a credit card with less checks and balances and with details harder to validate. Fraud detection processes (human and automated) will need to be updated to consider the changing behaviours.
On claims management companies (CMCs)
Increasing the small claims limit is anticipated to push the bulk of whiplash claims into the small claims track and with that claimants into the hands of CMCs.
Certainly they will enter the market in a representative capacity and challenge existing claimant firms to rethink their current business models and possibly see them withdrawing from the low-value market altogether or potentially entering into ABS joint ventures.
Whilst it is a positive move that the Financial Conduct Authority is likely to take over the regulation of CMCs in April 2019, we are mindful that CMCs are effective in navigating new obstacles – as seen following the ‘Jackson’ ban on referral fees.
On litigants in person (LiPs)
Without inter party costs in the small claims track, damages based agreements (DBAs) are likely to increase. This is where claimants share a percentage of thedamages they receive with their solicitor/CMC representative. This is expected to result in an increase in LiPs.
This will ensure claim numbers remain high as the right to claim compensation is now firmly established in the national psyche. LiPs bring additional challenges for compensators who will have to manage the process and approach to claim presentation differently.
Comment
The Claims Portal has been a success. The vertical and horizontal extensions we have already seen are testament to this. Further extension is likely both in respect of other types of personal injury claim and an increase in the upper value claims limit.
We believe the Portal is England and Wales’ blueprint for the future, of not just personal injury claims, but other forms of civil litigation, and maybe beyond.
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