28 February, 2017
The Ministry of Justice has published part one of its response to the 'Reforming the soft tissue injury ('whiplash') claims process' consultation.
Small Claims Track
The small claims track will be increased from £1,000 to £5,000 for minor RTA soft tissue related personal injury claims and from £1,000 to £2,000 for other personal injury claims in line with inflation.
The Government has decided not to remove payment of PSLA for minor RTA related soft tissue injury claims nor to have a single payment for minor claims. Instead, the Government intends to pursue a tariff of fixed compensation for all claims with an injury duration of between 0 and 24 months.
Offers to settle RTA related whiplash claims without medical evidence will be banned. The ban will cover both the offering and requesting of such settlements, and it has been made clear that there will be no exceptions to the ban.
Non RTA defendants and insurers will be disappointed by the government's announcement to increase the small claims limit by just £1000 rather than the proposed £5000. Increasing the limit by £1000 will, without doubt, result in an increase in general damages. It is expected that claimants will attempt to over inflate the value of their claims in order to benefit from fixed recoverable costs in the fast track.
Undoubtedly, the biggest impact will be felt in the RTA market with the government contending that the proposed RTA reforms will result in car insurance premiums being cut by around £40 a year. The new fixed tariff which caps whiplash compensation pay-outs will represent a significant decrease in the value of RTA compensation; damages will be limited from £225 for a 0-3 month injury up to £3,725 for a two year injury.
The proposal to increase the small claims limit will be dealt with by statutory instrument, whilst the other changes will be contained in the Prison and Courts Bill and will be implemented by 1st October 2018.
For further advice please contact Sarah Wilkinson by email or on 01254 662831.
Learn more about our Insurance department here