A press release from the Ministry of Justice this morning has confirmed that whiplash reform and increases to the small claims track limit for personal injury claims will be taken forward in the Prisons and Courts Bill. The Ministry of Justice has simultaneously released Part 1 of its response to the recent consultation on reforming the soft tissue injury claims process, which proposes an implementation date for the changes of 1 October 2018. Part 2 of its response will be released later and will deal with recommendations made by the Insurance Fraud taskforce. Ruth Lawrence reviews and discusses the proposals.
What injuries do the proposed reforms cover?
The majority of the proposed reforms are intended to cover road traffic accident-related whiplash claims and minor psychological claims. A definition will be developed to avoid the possibility of claimants attempting to subvert the reforms by re-labelling their injuries. Minor psychological claims will include ‘travel anxiety’ and ‘shock’ but will exclude more severe psychological injuries such as PTSD and depression.
Small claims track
The only reform proposed to cover other types of personal injury claim is the small claims track increase. While the limit will be increased to £5,000 for RTA-related claims, it will increase to £2,000, in line with inflation, for other types of personal injury claim. The Government has indicated that it will work with stakeholders to ensure that this increase will work in practice and has indicated that it will also consider how best to support litigants in person bringing claims, working closely with Medco and the Claims Portal to do so.
A tariff system
A new set of tariffs is included in the consultation response. This has been updated to account for the new Judicial College Guidelines and now includes injuries lasting less than six months. The Government has indicated that it will not seek to remove general damages recovery for these claims, rather include them in the tariff system.
There will be a single tariff, as follows, to cover whiplash and minor psychological claims:
0 – 3 months - £225 3 – 6 months - £450 7 – 9 months - £765 10 – 12 months - £1,190 13 – 15 months - £1,820 16 – 18 months - £2,660 19 – 24 months - £3,725
The response also envisages a 20% judicial uplift to be applied in ‘exceptional circumstances’. This will not be defined in the legislation; rather, it will be left for the courts to interpret.
The legislation proposes banning the making, soliciting, accepting and receiving of pre-med offers in RTA-related whiplash claims only. It is proposed that the ban will be enforced by regulatory bodies, to be defined in the legislation.
What do we think?
We are pleased to see positive action from the Government in this area to reduce the cost of whiplash claims and eliminate fraud. We hope that the various strands of reform are brought together carefully at implementation to maximise their benefits.
Discussing this with my colleague, Hill Dickinson head of fraud Peter Oakes, it is clear that some proposals will require careful monitoring and management. The removal of claimant solicitors from the process in relation to most personal injury claims is going to drive down costs and frequency in the short term but accident management businesses and alternative business structures will likely move into the space vacated by law firms. Without effective regulation this could lead to an increased fraud risk. Likewise, we may see fraudsters move into other areas such as repair and credit hire. Measures will be required to eliminate that possibility.
In terms of quantum, the division of the 0 – 6 month bracket is sensible, however there remains potential for development of an industry of ‘one day’ claims being brought for £225. We are also likely to see concerted efforts to bring claims beyond two years. Such behaviours will require careful monitoring to detect and exclude.
The reforms have been included in the Prison and Courts Bill which has been placed before Parliament for consideration.