27 January, 2020
The Civil Liability Act reforms are set to come into force on 6th April 2020 and will make changes to the personal injury claims process. Some of the changes are:
In an apparent response to the rise in fraudulent claims, tariffs will be introduced for some whiplash injuries from road traffic accidents which will be far lower than current compensation levels. Although these tariffs have not been published as yet by the government. The proposed figures are significantly lower than the current awards and may be as little as £500.
The Ministry of Justice (MOJ) is leading the reforms and will introduce a legal definition of what constitutes a whiplash injury and will also create a ban on offering to, or settling whiplash claims without medical evidence.
The small claims limit will increase from £1,000 to £5,000 for road traffic accidents (not including pedestrians, cyclists, motorcyclists and horse riders) and from £1,000 to £2,000 for other claims. This mean more claims will be dealt with in the small claims court, where Claimants are not able to recover their costs.
The MOJ have instructed the Motor Insurers' Bureau to create a new 'portal' system for the new small claims track limit. Which means all accidents on or after 6th April 2020, where there is a claim for personal injury valued at under £5,000, will start in this new 'portal'.
The MOJ is also working with the Civil Procedure Rule Committee to develop the necessary changes to the Pre-Action Protocol and rules to support this reform programme.
These changes have not been welcomed by all and it is rather concerning given that neither the tariffs nor the new protocol have been seen yet. Many are concerned about the ambitious timescale, with some calling for a delay to ensure that the access to justice does not suffer.
There is also concerns if the new 'portal' will be ready for when the reforms come into force and there is further scepticism given that the current personal injury portal, which was created in 2010, was plagued with technical problems in the beginning.
The question is, who really wins with these new changes? On the face of it, it appears to be the insurers, who wanted a rise in the small claims limit and tariff fees for whiplash. There has also been questions raised if the insurers (who are to fund and develop the system for the new 'portal') may have a motivation to ensure the 'portal' does not operate well - as the more it is used, the more they will be paying in compensation.
These changes could have a massive impact on the ability to present a claim for whiplash. For example, the manual worker driving home from work is hit from behind. They sprain their neck and are unable to work for a couple of weeks. They are self-employed and have no income for those 2 weeks. They present a claim to the other drivers' insurers. They admit liability and arrange a medical examination to assess their injuries. The expert confirms the time off work was justified. So far so good. They present a claim for loss of earnings. In our experience the insurers will ask them to prove those earnings, but they are likely to require all of their trading accounts and invoices for the last few years, copies of documents to prove they would have been working. If they engage forensic accountants to examine the records, there may be additional documents and details analysis of their income, tax and National insurance payments. We have even had situations where accountants have been engaged to assess an individual who is employed. The insurers refuse to pay and drag the claim out. The injured claimant contacts a solicitor to help with the claim. Under the proposed new rules, the insurers will not pay the solicitors fees. The solicitor can take the case on, but they are likely to want to charge or take a percentage of the claim. Under the current system the costs are fixed at £500 plus VAT. The insurers will be required to pay a fixed amount of compensation under the new tariff-based scheme of say £500. Even if the loss of earnings can be recovered, the costs are likely to have a significant impact on the amount recovered, making it uneconomical to pursue the claim.
As it stands, only time will tell as to how the new system will function and if these reforms affect the number of claims bring brought, but they are likely to have a significant impact on individuals, who through no fault of their own have suffered losses.
For more information contact Lyndsay Baxter in our Personal Injury department via email or phone on 01772 220384. Alternatively send any question through to Forbes Solicitors via our online Contact Form.