PI Reforms Back on the Table

Article

21 November, 2016

Following our article reporting rumours that the government had decided to shelve the PI reforms announced by George Osbourne in his Autumn Statement in 2015, a full consultation headed "Reforming the soft tissue injury ('whiplash') claims process: a consultation on arrangements concerning personal injury claims in England and Wales" has subsequently been published by the government.

In this unexpected move, the government have brought forward a package of measures to crack down on minor, exaggerated and fraudulent soft tissue injury ('whiplash') claims stemming from road traffic accidents (RTAs). It is hoped that the package of measures will disincentivise minor, exaggerated and fraudulent road traffic accident related soft-tissue injury claims.

In the foreword to the Consultation, Lord Keen of Elie QC acknowledges that this is a complex area, and that claims are brought for a number of reasons. However, whiplash claims are 50 per cent higher than a decade ago, despite fewer accidents being reported.

The Consultation paper proposes that compensation for pain, suffering and loss of amenity (PSLA) for minor whiplash claims will either be removed entirely or replaced by a fixed sum of £400 (£425 with a psychological element). In addition, the Consultation considers a number of other proposals including:

  • 'Minor' to be defined as an injury lasting six months or less.
  • Compensation reduced for PSLA in other RTA soft tissue injury claims above the 'minor' threshold, by way of a set compensation tariff, with maximum PSLA of £3,500 (£3,600 with psychological injury) for an injury of 24 months' duration.
  • Small claims track limit for PI claims to be raised to £5,000.
  • Establish a process for assessing duration of an injury either on a diagnosis or prognosis basis.
  • Ban on pre-medical offers to settle in RTA soft tissue injury claims.
  • The implementation of certain recommendations made by the Insurance Fraud Taskforce (including the late withdrawal of claims where claimants would be required to seek the court's permission to discontinue less than 28 days before trial, and mandatory notification of referral sources);

In addition, the government is also gathering views on other issues affecting the personal injury sector including:

  • credit hire;
  • a system of early notification of claims;
  • the reform of the rehabilitation regime;
  • recoverability of disbursements;
  • the introduction of a points system for calculating damages.

Forbes comment

According to the government, the reform package seeks to tackle incentives on both sides to reduce the significant costs associated with personal injury claims. Whilst the government considers the proposals to be a coherent package, they also ask that the measures are considered individually.

From a defendant's point of view, if small claims limit increased to £5000, this would have the effect that the cost of such claims would no longer be recoverable from defendants, although certain costs arising from litigation and a number of disbursements could still be claimed by a successful claimant.

In addition if pre-med offers are banned, this prohibition may also be extended to slip and trip claims. According to the report, anecdotal evidence indicates that claimants following a slip/trip can be subject to such offers from supermarkets and local authorities.

The consultation is open for a relatively short period and closes on 6 January. There is no time stated for when the proposals will be implemented, but it is anticipated that the reforms will be put into effect as soon as possible.

A copy of the Consultation can be found here.

For further information please contact Sarah Wilkinson by email Sarah Wilkinson">Sarah Wilkinson or call 01254 222440.

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