Market Round Up: March 2024

Those with long memories will recall how Aviva once suggested replacing financial compensation for those suffering minor injuries in motor accidents with a bunch of flowers. While the Official Injury Claim tariff may only be marginally better, saving insurers huge amounts (just how much we will discover later this year), that is not stopping them asking for more.

It was inevitable that the Association of British Insurers (ABI) would continue pushing and so in February it published a 10-step plan to combat the rising costs of motor cover, one of which was extending the tariff to non-whiplash injuries.

The Roadmap to tackle insurance costs said that “many claimants are now encouraged to claim for additional injuries that the claimant legal sector argue should attract significantly higher damages amounts than the tariffs that have been set for whiplash”. This meant the “reform principles enacted for whiplash should be applied to similar injuries to keep costs under control”.

Increasing the £5,000 limit for claims that go through the Official Injury Claim (OIC) portal to account for inflation “would also help control the total cost of settling such claims”, the ABI went on. “We continue to work with government, regulators and the courts to reflect these views on behalf of the customers who are paying premiums.” You bet they will.

You can also bet that insurers have prepared their excuses for why, despite the tariff and the reduction in the cost of injury claims, as well as the number of claims falling off a cliff, insurance premiums have continued to rise. But there comes a time when blaming Covid, Ukraine, rising repair costs and Uncle Tom Cobley is not enough to justify bearing down even more on compensation for injured people.

Another significant factor will be the Supreme Court decision on mixed injuries, which we now await after the hearing in February, although the smart money seems to be on it upholding the Court of Appeal ruling.

Ahead of that, the Association of Consumer Support Organisations (ACSO) published a report on mixed injuries that explained how, since the Court of Appeal decision, defendant law firms have looked to challenge non-tariff injuries on the basis of causation and the mechanics of the accident.

“Challenging how specific injuries occurred but not disputing the tariff injuries results in the claim remaining on the OIC portal,” it said. “One impact is that claimants without representation may then struggle to comprehend the significance of an allegation or how properly to address it.”

The report noted how the number of motor personal injury claims has fallen from a pre-pandemic 653,983 in 2019 to an all-time low of 352,230 in 2023 as a result of the OIC. The proportion of settled claims involving mixed injuries has, according to the ABI, risen from 27% in 2016 to 39% in 2023.

However, ACSO said that data it has collected from three anonymous medical reporting organisations (MROs) countered the claim of defendants that the OIC has turned consumers in England and Wales into “a nation of weak ankles, knees and toes”. One of the MROs, which collected specific data on non-whiplash injuries prior to the introduction of the tariff, recorded an 8.3% increase in the average number of non-whiplash injuries reported per medical report from 1.56 in 2019 to 1.69 in 2023.

Matthew Maxwell Scott, ACSO’s executive director, said: “Although all MROs point to a small increase in the number of injuries per claim of between 8% and 16%, this is to be expected due to the decreased value of whiplash-only claims. This increase is also in a market which has roughly halved in size, and so represents a much smaller overall number of claims.” In short, insurers are still saving a load of money.

The ABI roadmap also complained about the current negative discount rates across the UK.

The ABI’s main problem, it would seem, is the likelihood of a change of government before any of its ideas can turn into government policy. Things do not happen quickly in Whitehall, as shown by the fact that the introduction of fixed recoverable costs (FRC) for low-value clinical negligence claims – which it said last September would happen this April – can now not happen. For some reason, however, at the time of writing the Department of Health and Social Care has not officially confirmed this.

However, the Ministry of Justice is pressing ahead with reforms to the FRC regime that came into force in October, opening the door to a possible court challenge. A judicial review issued by the Association of Personal Injury Lawyers last August, challenging aspects of the new FRC rules, was stayed pending the outcome of the consultation on the changes. Now it’s been published, we’re waiting to hear what it will do.

Outside of personal injury, the big story is the fall-out from the collapse of Sheffield-based SSB Law, which is attracting national media coverage. The focus is on claims for damage caused by cavity wall insulation that it brought under conditional fee agreements and the after-the-event insurance it put in place being repudiated in some cases. This has led to successful defendants and their insurers seeking to enforce costs awards against clients, with an average of £20,000 being cited by some.

MPs are increasingly speaking out about this, as they become aware of the impact on constituents, and several have signed an early day motion urging the government “to ensure that all demands for payment and court orders resulting from the collapse of SSB Law are dropped immediately”. Speaking after she held a meeting with over 20 families facing costs demands, Bradford West MP Naz Shah said: “This is both a local crisis and a national scandal.”

Expect to hear more and more about this, although credit to insurer RSA for putting its enforcement efforts on hold while it negotiates with SSB’s administrators.

The other aspect of the story that is jaw-dropping is the fact that, when SSB formally went into administration in January, it owed six litigation funders £200m. Yes, you read that right. It would seem the Solicitors Regulation Authority conducted an inspection of the firm a year ago and so questions will now be asked of the regulator – already facing plenty over the collapse of Axiom Ince – over whether it missed the warning signs. This is another part of the story that will run and run.

Neil Rose is the Editor of Legal Futures