Government confirms U-turn on raising small-claims limit for PI claims

Djanogly: much easier for insurers to defend claims

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.



    Readers Comments

  • The so called facts and figures leave a lot to be desired. Motor cars are becoming more and more resiliant. Bumpers bounce back out with little structural damage. Before we label all whiplash claimants as fraudsters should we not consider the vehilces own construction? And, it is said whiplash claims “surged” by 70% between 2005 and 2009, where is the data? But, more a difficult point to argue is the “fact” that this surge is “largely attributed” to use of CFAs! How so? Why should this be? It is totally unfounded knee jerk infantile rambling. The vast majority of whiplash claims only attract a pre-set 12.5% uplift, hardly worth bothering about. I fear this whole article, this whole situation is generated by those parties who lobby the ConDem government. Perhaps they see an election not far off? Any commited lawyer and any conscientious fair minded person will readily see, and agree, that the currrent personal injury claim limit of £1,000 is still a lot of money to a lot of people.
    Bill P.

  • Russell Smart says:

    This announcement confirms that Djanogly either doesn’t have a clue or he has sold his soul.
    Only yesterday Abigail Plenty (Deputy Director) MOJ confirmed that the limit wouldn’t be raised at the Westminster Policy Forum.
    If whiplash adds £90 to a motor policy then please explain why premiums rose by 40% (£300-£400) and not by £90?
    Lets not forget that insurers have also made back “add on” BTE income of £25 per policy and on top of that they have been generating and selling claims to insurers for £800 each. They themselves are responsible for a rise in claims and not lawyers.
    Perhaps the real reason for this U- turn is that insurers have just worked out that they will now be worse off and not better off under Djanogly’s LASPO Bill. This man does not know what he is doing – but then I suppose he doesn’t really care.

  • Once again, Jonathan Djanogly confirms his complete ignorance of whiplash injury and the clinical data to support it. And I’m intrigued about this new batch of independent medical experts who are going to come to the insurers rescue and assess all future whiplash claimants; am I not right in thinking it will be the same experts as those already assessing them but just that they will be ‘appointed’ by the Court? I’m sure our insurance premiums will plummet in no time.

  • I recall years ago speaking to my career adviser at school and being assured that if I work hard and qualify as a lawyer, I’ll have a good job for life.

    I don’t recall him qualifying that comment with a caveat of “unless and until a hanful of lunatics decide on a whim to dessimate an entire industry at the same time as pandering to the insurers at the expense of access to Justice to innocent accident victims who once enjoyed access to a Legal System which worked and of which the UK could be proud.”

    Previous reforms were ill thought out, as the subsequent satellite litigation demonstrated, but the aim of the current reforms is perfectly clear. To end the vast majority personal injury litigation and put more money into the already hugely powerful insurance sector, and damn the consequences for the individual and the legal sector.

    Have the consequences even been considered? What additional cost to society will this impose? Perhaps 80% or more of PI lawyers, claimant and defendant, out of work and on the dole, many seeking benefits. A very small proportion of PI lawyers are in the envious position of not having to rely upon continued work to feed their children.

    There are many ways to tackle PI fraud, and this is merely a convenient hook upon which the insurance industry and government can hang their coat and gain public sympathy based on innacurate and misleading data. Those same members of the public may take a different view when their lives are shattered by an accident for which they are no longer able to find legal representation.

  • Mod says:

    These “statistics” can’t possibly be relied upon. They are entirely made up.

    My car insurance quotes last month ranged from £500 – £1000. Where does this £90 come into this range? Until there is more transparency into how car insurance premiums are calculated by the insurers the figures should be completely ignored.

    Also, how can you make it easier to defend claims yet simultaneously “genuine victims of whiplash with valid claims get fair compensation quickly, cheaply and easily” How can the 2 co-exist?

  • Barry O says:

    This is nothing to do with fraud prevention but everything to do with who has got the deepest pockets and can afford to purchase the ear of certain Ministers.

    Reasonable argument is futile as it has been shown that the changes will cost the NHS and the DWP why more than will be saved due to the loss of claw back on so many cases. I quote “those opposed to the changes have note been able to lay a punch”.

  • In the early days of credit hire some insurers instructed solicitors to defend all cases in the Small Claims Court in the hope of outgunning the hirers. They failed because the hirers basically matched them in the “arms race” and had better arguments. Will individual claimants be able to do this with sub £5000 injury claims? Not unless they are prepared to pay full rates, which will defeat the point of claiming and leave them exposed to huge losses if they lose. That will deter the chancers, but also the genuine claimants at a stroke.

  • Adam Sterling says:

    Have the insurance industry put chilli in the coalitions eyes – they will put a whole legitimate industry out of business which will in affect the economy in simply to prevent the small number of fraud claims, which the insurance companies should be doing.

    I don’t see the reasoning for questioning the integrity of doctors and GP’s who currently examin a claimant – who are all rightly qualified, experienced and regulated and provide a statement of truth on the report. Making a statement that a doctor who has prepared a report has a direct link to a claimant or defendant is without any foundation. The PI Protocol provides for the claimant to be examined by different experts or a jointly appointed expert. The current system works.

    I don’t see how an a panel of court appointed doctors will carry out the examination differently other than the process making it deliberately daunting for a claimant to go through this whole process, where they are a victim anyway.

    Amend the Protocols to add a statement where the doctor carrying out the examination states that he is not connected with, or knows the claimant directly or indirectly. That will solve the “problem” they are creating.

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