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Justice minister uncompromising on whiplash reforms and says more fixed costs are on the way

Keen: Will monitor impact on premiums

Justice minister Lord Keen today set the stage for next week’s House of Lords debate on the Civil Liability Bill with an uncompromising message that there are “too many unmeritorious whiplash claims made each year which proceed without challenge or investigation”.

He also made clear the government’s intention to extend the application of fixed recoverable costs.

Speaking at the Association of Personal Injury Lawyers annual conference in Birmingham, Lord Keen accepted that there were “genuine” PI claims, but said RTA-related claims were 70% higher than in 2005/6.

About 85% of these were for whiplash despite improvements in car safety and a decline in reported accidents, he said.

“The level of compensation paid out in such claims is, in the government’s view, out of all proportion to the genuine injury suffered, especially when balanced with the effect they have on premiums.”

The bill receives its second reading next Tuesday, and Lord Keen said the definition of whiplash on face of the bill broadly covered soft-tissue injuries to the neck, back and shoulder.

“There will be a supplementary regulation which will further ensure that the group of claims causing most concern is captured and this regulation will be the subject of debate by Parliament under the affirmative resolution procedure following the bill achieving Royal Assent,” he explained.

Lord Keen insisted that many RTA-related personal injury claims “are suitable to be heard in the small claims track, which is designed to be uncomplicated and accessible to litigants in person”.

He continued: “They are not so complicated as to always require legal representation, particularly in the case of whiplash claims, where the introduction of the tariff now provides certainly as to the value of the claim…

“I am confident that these reforms will reduce the cost of litigation and tackle the continuing high number of whiplash claims, benefiting consumers through reduced motor insurance premiums.”

He said the government would monitor whether insurance premiums do indeed fall as a result of the whiplash and discount rate reforms, and “will take further action if necessary” if they do not. He did not specify what this could be.

Addressing the reforms to claims management companies, he said: “There is no doubt that many whiplash claims are driven by a substantial industry that encourages unnecessary, inappropriate and indeed sometimes even fraudulent claims through cold-calling and other nuisances.”

The Ministry of Justice is reviewing the impact of Legal Aid, Sentencing and Punishment of Offenders Bill 2012, and though much of the focus has been on part 1, concerning legal aid, Lord Keen said the civil justice reforms in part 2 would be part of the review.

He said the Civil Justice Council has agreed to hold a stakeholder session to gather views and the Ministry of Justice would also be asking for structured feedback and data.

Arguing that legal costs remained “disproportionate” in many areas of civil litigation, Lord Keen emphasised that the government supported the principle of extending fixed recoverable costs and was considering how to take forward Lord Justice Jackson’s report on them last year.

Among the issues were “how best to deal with differences between types of civil litigation”, he explained.

There would be a consultation on its proposals, giving stakeholders another chance to have their say on the issue, he added.

Lord Keen indicated that the Ministry of Justice would listen to good arguments. He said that APIL lobbied successfully to apply fixed recoverable costs only to holiday sickness claims, and not all package holiday cases, but warned that it would return to this if it proved necessary.