Market round-up: December
So the Civil Liability Bill has cleared Parliament and now awaits imminent Royal Assent. The government offered up concessions to ease its path – most notably in relation to vulnerable road users – but not in any way that disturbed the fundamental proposals.
The next 18 months will see work on the various statutory instruments that underpin the reforms – particularly the small claims limit increases and compensation tariff – along with the new portal for litigants in person.
While lobbying will continue in a bid to influence the secondary legislation, the technology seems the most likely cause of future problems for the government.
The MIB has been tasked by the Ministry of Justice (MoJ) with delivering the portal for testing next autumn and then implementation in April 2020. I heard Dominic Clayden, the relatively new head of the MIB – and the bête noire of claimant lawyers during his time at Aviva – tell October’s MASS conference that he was confident of delivering.
He said he was “comfortable” with what he described as a “realistic” timetable. The build would start at the end of December or early January.
“Six to nine months is not an unreasonable build time,” he said, “and actually when you look at it, it [the claims process] is not the most complicated process.”
Similar confidence, albeit less strident, was expressed at the ABI’s motor conference last month by Lord Keen, who speaks for the MoJ in the House of Lords, and civil servant David Parkin, deputy director for civil justice and law at the MoJ.
But many others I have spoken to are sceptical, to say the least, as to whether the timetable will be met.
Mr Parkin said the fact they had already delayed a year was a sign that the MoJ had learned from the implementation of MedCo, but then April 2019 was clearly never remotely possible, even for a botch job.
There are continuing doubts about whether litigants in person will actually use the portal – given how many consumers have chosen to use claims management companies to sort out far simpler PPI claims – and how they will be able to cope with the process. Who’s going to look at the medical report to check that nothing’s been missed?
What did come out at the ABI conference were worries that the new portal will not have proper fraud checks built in – indeed, surely there is even less incentive to challenge potential fraud if the payout is £235 – and also that claimant behaviours might change to thwart the new regime.
With less reputable claims management companies and McKenzie Friends acting for litigants in person in the new world, speakers predicted a sudden increase in claims for injuries not covered by the whiplash definition – for example, bashed elbows and knees – leaving claimants having to manage both a tariff claim and a non-tariff claim at the same time. And/or the focus will shift to maximising recovery from credit hire and so on.
Of course, it is a running sore that the government’s response to part 2 of the original whiplash consultation – covering issues such as credit hire and rehabilitation – is still to be published, some two years on. Mr Parkin said it would be addressed next year, but there is little comfort to be found there.
The focus on part 1 reflects both a political desire to be seen to crack down on the ‘compensation culture’, as well as the heavy cuts suffered by the MoJ this decade, leaving policy teams understaffed. That’s why we also haven’t heard of any progress with Sir Rupert Jackson’s fixed recoverable costs reforms, although there appears the will at the MoJ to push forward with them.
Mr Parkin told the ABI conference: “Is there likely to be a shift in claims behaviour as a result of the whiplash tariff? Possibly, but that doesn’t undermine the purpose and benefits of what we’re doing. It’s a matter of monitoring that behaviour and responding accordingly.”
The conference also heard from Clare Lunn, director of fraud at LV=, who said she was seeing “pop-up” claimant law firms buying illicit data of possible claimants in a bid to make the best of the current regime. By this she meant claimant lawyers who were known to insurers for bringing questionable claims starting up new firms to do so, which would then take some time for insurers’ systems to pick up.
But perhaps the most contentious contribution came from Andy Watson, chief executive of Ageas UK. While he expressed confidence that insurers would live up to their promise to pass on any savings generated by the reforms, he then cast doubt on whether the expected £35 reduction in premiums would actually happen.
He said it was “sensible” as a figure calculated from a “snapshot” of the market at that time.
“The problem is that the market is not a snapshot that just stops and moves on in a planned way. The market’s incredibly dynamic, so there will be two things that mean the £35 won’t actually happen in practice,” he said.
“It may well be true that, without the Civil Liability Bill, premiums would have been £35 higher than they would otherwise be, but you will have claims inflation in other heads of damages… and people, including claims management companies, will adapt their behaviours to the new reality.”
So it may end up being a saving that nobody actually benefits from. But the time has now passed for thinking that common sense will prevail when it comes to whiplash.
