Market round-up - March 2021
Well, it’s no longer a question of ‘if’. I suspect there are some PI lawyers out there who have been secretly hoping that the whiplash reforms would simply never happen and so have done little by way of preparation as a result. But the grand reveal at the end of February of all the new rules and regulations, along with a start-date of 31 May, put paid to that.
At the time of writing, the expert commentators are still combing through the rules to see what little 'presents' the Ministry of Justice (MoJ) and Civil Procedure Rule Committee have left, but we can be sure that, as well as various grey areas and points of friction, there will also be holes still to fill, such as the court process for claimants if the insurer denies liability or if they want to challenge their level of compensation and how mixed claims will be handled.
What I can say is that consultation with the Lord Chief Justice over the tariff made precious little difference – the increase since indicative figures were published years ago was negligible – while the final version of the rules was sufficiently similar to what the MIB had already seen that the changes it needs to make to the system will not delay implementation.
One big question is what is happening with employer’s and public liability claims. The statutory instrument makes no provision for the proposed doubling of the small claims limit – indeed, it specifically maintains the £1,000 limit for “any other claim for personal injuries” – and so some claimant firms are celebrating as if the move has been ditched.
I wouldn’t be so hasty. I asked the MoJ specifically about this and a spokesman confirmed that it remains committed to raising the limit. He would not be drawn on the timetable, however, and potentially it could even still happen on 31 May. (Although, if I had to guess, I’d say it won’t be.)
From a journalist’s point of view, these reforms are bound to produce a lot of stories. There will be, without doubt, teething problems aplenty, and I am looking forward to the regular publication of management information from the portal. I understand that this will be much more detailed than the existing portals produce and show if there are worrying behavioural trends.
While the information made public will not name names, there will be a version that does. I’m told that the Financial Conduct Authority is keen on seeing this, as the regulator of both insurers and claims management companies, and no doubt the Solicitors Regulation Authority will take an interest in law firms whose actions are questionable too.
As the new regime settles down, however, attention will turn to what comes next. Will those long-awaited part 2 reforms to credit hire and rehabilitation happen? Could something more radical be in the works?
PI lawyers could do with a rest from the constant change, and hopefully the MoJ will listen to a report from a Civil Justice Council working group made up of claimant and defendant lawyers, as well as compensators, who were tasked with recommending further reforms for low-value (under £25,000) PI claims.
The group expressed a range of concerns about these changes and cautioned that any move to push other claims into the new portal should be taken with “great care, avoiding a ‘one-size fits all’ approach”. It recommended that the next stage of portal development should allow the transfer of data to and from the current MoJ portal, which campaigners have called for from the start.
They were keener on the government establishing a “single, consistent and reliable database to facilitate the identification of the types of insurance fraud, their frequency and their sources”.
This data should also be used as the basis for a consultation on how best to combat fraudulent and unmeritorious claims in the future, along with a “coordinated campaign to educate the public as to the true nature of insurance fraud, its cost to the general population, and the criminal and civil penalties for making or supporting a fraudulent claim”.
In any case, one could make a strong argument that no further reforms should be made until there is evidence that the insurance industry has lived up to its promise to reflect the £1bn of savings it could make from the Civil Liability Act in lower motor premiums. We won’t see this evidence until 2024 probably, but the omens aren’t great.
According to the Compensation Recovery Unit, the number of motor claims unsurprisingly fell by 46% in 2020. But in the latest figures from the Association of British Insurers, the average price paid for comprehensive motor insurance in 2020 was £465, down just 1%.
