If someone causes you an injury which was not your fault in a road traffic accident, their insurer will meet your claim for damages for the injury. That’s what insurance is for, right? Well, that will no longer be the position if proposed reforms go through if the claim is for a soft tissue injury in a road traffic accident. The precise definition of soft tissue injury is yet to be formulated, and capable of course of being wider than just whiplash injuries.
This is a radical departure from a basic principle of the law of England and Wales– a physically injured person is entitled be compensated for an injury caused by the negligence of another, and one which as far as I am aware is unprecedented
The title of the proposal refers to proposed reforms of the whiplash claims process only, but that is misleading. It contains other very serious proposals – one of which is that of raising the small claims limit to £5000 for the injury element of any personal injury claim – it will matter not that the value of lost earnings etc takes the value above that – the sole determining factor will be whether the injury aspect is worth more than £5000. This will encompass quite significant injuries including, for example, an injury involving broken bones at work.
Claims under £5000 constitute the vast majority of injury claims – probably over 70%.
The effect of this increase will be to preclude the recovery of legal costs for dealing with these cases at all, which means that the Claimant will be without legal representation and on their own in the legal process.
The opposing insurer will not be constrained in the way and individual will be in spending money on highly skilled legal representation to oppose the claimant in putting arguments to the court, including difficult technical arguments relating why the claim should fail on legal grounds or seeking to reduce its value. There will be inequality of arms. The consequence of this will be that people with quite serious injury will have to make one of three choices:
- Faced with the prospect of arguing it out with the insurance company’s paid lawyer in court, or not bothering to claim at all – I think that will be the choice of many;
- Paying for their own lawyer to deal with it for them out of their own pocket. That is very unattractive as they will not recover the lawyers costs
- Instructing a new breed of unregulated persons or organizations to do it for them in return for a part of their compensation – a very real prospect. This increase will immediately create a large and lucrative gap in the market for unscrupulous representatives to do exactly this.
Lawyers are strictly supervised in terms of how they are trained, what they can charge, what insurance they must carry against their mistakes, and they have to follow an ethical code. If we don’t the public can and do complain about us and we can be subject to disciplinary proceedings. On the other hand there are no such requirements at all on what non lawyer organisations can do, charge or take from a person’s damages.
At £5000 one is no longer speaking of a minor injury and the legal issues can be very complex regarding whether the claim should succeed at all and if it should how much it is worth.
The opportunity for less scrupulous organisations to step in and provide a service is thereby created. I suspect that this is what is envisaged by the Ministry of Justice, which may introduce greater regulation for such organistions. However given that there will be no recovery of costs from the guilty party how will these organisations make money – I suspect by charging high levels of fees to be taken from the injured persons compensation.
One wonders how many claims will be seriously undervalued and the subject of later negligence claims against organisations which were in so much of hurry to cut corners and get a settlement that they miss important factors that make the claim worth much more than it seemed.
The much vaunted promise from the insurers to pass on any savings to the public cannot be enforced nor the actual benefit properly evaluated. There is no precedent for such a promise being honoured.
At the end of the day these reforms will in my view only create the opportunity for the insurance industry to increase its profits, to the serious detriment of the public.