Written by Qamar Anwar, Managing Director of First4Lawyers
Shortly before Christmas, Aviva announced that whiplash and minor injuries reform inaction has left motorists picking up costs of £5m per day since George Osbourne’s 2015 autumn budget.
This started me thinking. As I read on further, Aviva went on to detail that nearly £1bn has been paid out in legal costs, which they say would not have happened if reforms cutting compensation and preventing lawyers from recovering low-value claims costs took place. What was this reminding me of?
Then it came to me, this news from Aviva had all the hallmarks of that classic festive character, Jacob Marley, who, in his own words “took advantage of the poor, just ignored the needy”.
I felt like the ghost of Christmas past as I reflected over 2017. Did the insurers not get what they wanted last year?
In June we had confirmation in the Queen’s Speech that the government did intend to press ahead with personal injury reform in the guise of the new Civil Liability Bill. While the proposed purpose of the Bill is to “ensure there is a fair, transparent and proportionate system of compensation in place for damages paid to genuinely injured personal injury claimants”, it quickly became clear that the motivation was as predictable as ever, with the government claiming the proposed legislation would tackle “the continuing high number and cost of whiplash claims to put money back in the pockets of motorists through reduced insurance costs”.
Repeated research has shown that these types of reforms will not put significant amounts back into the pockets of motorists. In fact, in response to Aviva’s news, pressure group Access to Justice said their research suggested that just £16 per year on average could be passed onto motorists once whiplash reforms come into force, down from £50 which was the original figure quoted by the Association of British Insurers. This is something we feared would happen from the beginning.
Aviva may say that the cost of the UK’s compensation remains at an unacceptable level, fuelled by fraudsters, opportunists, lawyers and claims management companies and paid for by honest motorists. But that just isn’t the case, and these unfounded allegations do nothing to help the debate.
Our own figures show that we generated the equivalent of 0.3% of all RTA claims submitted to the CRU in 2016/17 which is down from 0.4% the previous two years.
So, we have to ask the question where and how are the other claims generated? Where are they coming from? The answer is, the insurers themselves. The very fact that insurers operate their own legal services through ABS law firms shows that they themselves clearly recognise the consumer need for such services, and are themselves profiting from it, to the tune of circa £100 million.
The news from Aviva just highlights that the insurance industry is at it again, devaluing the claims of those who have been injured in a motor accident and trying to prevent vulnerable people from having legal representation to assist with their claim, whilst having to face insurance companies’ lawyers.
The government needs to recognise this, and reforms must, at the most basic level, ensure that the most vulnerable have the support and access to justice that they need. We can only hope that by December 2018 the government has turned its face to the future and consulted the ghost of Christmas yet to come.
This article was previously featured in Claims.