The government today executed a major U-turn on raising the small claims limit for personal injury claims, having announced three months ago that it was not going to do so.
Following a Whitehall ‘whiplash’ summit with the motor insurance industry, the government said raising the limit from £1,000 to £5,000 would make it “easier for insurers to defend spurious or exaggerated claims by ending the situation whereby it is easier and cheaper to settle claims than it is to fight them”.
It was only on 8 February, in its response to the Solving disputes in county courts consultation, that the Ministry of Justice said the personal injury small-claims limit would remain at £1,000.
In the summer it will consult on the details of this and on the feasibility of introducing independent medical panels to replace the current assessment of whiplash injuries either by GPs or by doctors employed by medical reporting organisations.
The Ministry of Justice said: “Independent (eg, court appointed) medical panel doctors without direct client links to either the claimant or defendants could help to provide a transparent and consistent approach to assessment and easier identification of exaggerated or fraudulent injuries.”
Justice minister Jonathan Djanogly said: “It’s totally unacceptable that we a seeing a disproportionate rise in whiplash claims when road traffic accidents are falling every year.
“Our proposed reforms will make it much easier for insurers to defend claims through the court system and will reduce fraudulent claims by tackling questionable medical evidence. The proposals will also mean genuine victims of whiplash with valid claims get fair compensation quickly, cheaply and easily.
“This is a part of a package of reforms including reforms to ‘no-win, no-fee’ and referral fees. This will reduce costs for insurers – savings which we strongly encourage them to pass onto consumers through cheaper premiums.”
The Legal Aid, Sentencing and Punishment of Offenders Bill – which introduces the Jackson reforms and referral fee ban – was given Royal Assent yesterday.
Law Society President John Wotton observed that despite the introduction of the RTA claims portal in 2010 – which is estimated to have saved insurers over £500m in legal costs – insurance premiums have steadily risen, way ahead of inflation.
“Fraud is entirely indefensible and the Law Society has made it clear time and time again that it is happy to work with ministers and the insurance industry on tackling fraud head on – but we must ensure that proper recourse to justice remains available for those who have been injured by the negligence of others. We doubt that simply giving insurers what they are asking for will reduce premiums.”
“All of us need to work together to ensure not only that dishonest or exaggerated whiplash claims are addressed but also that insurers tackle other factors such as excessive car hire charges, which are inflating consumers’ premiums.”
The government cited Association of British Insurers figures showing that the number of whiplash claims surged by 70% between 2005 and 2009, a rise it said was largely attributed to the increasing use of conditional fee agreements. Insurers say that around 50% of the costs of insurance premium increases are related to personal injury claims, with whiplash claims adding £90 to the average premium.
It added that research published in January by LV= car insurance found that 60% of GPs have seen an increase in the number of patients they believe feigning whiplash in the last two years.