Government Unveils the Civil Liability Bill Introducing Whiplash Reforms and Changes to the Discount Rate

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20 March, 2018

The Justice Secretary David Gauke has unveiled the Civil Liability Bill to Parliament. The bill includes reforms to clampdown on whiplash claims as well as changes to the way the personal injury discount rate is calculated for serious injuries.

In a statement from the Ministry of Justice, Justice Secretary David Gauke said: "The number of whiplash claims has been too high for too long, and is symptomatic of a wider compensation culture. We are putting this right through this important legislation, ensuring whiplash claims are no longer an easy payday and that money can be put back in the pockets of millions of law-abiding motorists."

The government anticipates that the planned whiplash reforms will save motorists £35 a year. The measures include:

  • setting fixed amounts of compensation for whiplash claims; and
  • banning the practice of seeking or offering to settle whiplash claims without medical evidence.

In addition, the bill contains changes to the way the discount rate applied to personal injury settlements is calculated. In February 2017 the discount rate was controversially reduced from 2.5% to minus 0.75%. In response, the government launched a consultation to address concerns that claimants were being over compensated and sought views on how to make the system better and fairer. Draft legislation was published in September which in turn was considered by the Justice Committee who have accepted the majority of its recommendations.

According to the Ministry of Justice the changes to the discount rate being introduced through the Civil Liability Bill will create a "fairer and better system" of setting the discount rate, whilst still providing full compensation to claimant. The bill will:

  • set the rate with reference to 'low risk' rather than 'very low risk' investments as at present;
  • ensure the rate is reviewed on a regular basis, the first review will be carried out within 90 days of the legislation coming into force and at least every three years thereafter; and
  • establish an independent expert panel Chaired by the Government Actuary to advise the Lord Chancellor on the setting of the discount rate.

Whilst the Ministry of Justice have not confirmed an implementation date, it has been previously indicated that the plan is to introduce the whiplash changes by April 2019. It is not known when the amendments to the discount rate will be implemented. The government also intends to increase the small claims limit to £5,000 for road traffic accident claims and £2,000 for all other injury claims. These provisions are not contained within the Civil Liability Bill as they can be introduced by a simple amendment to the Civil Procedure Rules.

For more information contact Sarah Wilkinson in our Insurance department via email or phone on 01254 662831. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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