Shares in legal marketing business NAHL plc – owner of National Accident Helpline – leapt 20% yesterday on the back of the government’s plans to reform low-value personal injury claims, one of the few positive reactions to the news from the claimant side.
In a statement to the London Stock Exchange, the AIM-listed company said it welcomed “the increased clarity”.
It continued: “As previously stated, enquiries generated by NAH are predominately non-RTA related; nevertheless a proportion of these do fall below the proposed £2,000 threshold and will require an alternative route to justice.
“We will examine the impact of the proposed changes with a view to ensuring all claimants have the necessary access to justice.”
Fairpoint Group – which has a significant PI practice – saw a smaller bounce, with its shares up 7.5%, while accident management group Redde was up 2%.
Leading legal expenses insurance company Arc Legal Assistance said the reforms offering LEI insurers “the opportunity to introduce new servicing models for lower-value claims”.
Director Richard Finan explained: “A ‘one size fits all’ approach to legal expenses will not be appropriate… In anticipation of the reforms, we had already started with a ‘blank sheet of paper’ to model how the current and new LEI processes can respond to these key changes.
“These reforms will add to the value of LEI, giving it even greater relevance and benefits to customers.”
The Law Society said the changes would deny people injured in road traffic accidents access to justice, although it was “glad” the Ministry of Justice had listened on the small claims limit for non-RTA cases.
A spokeswoman said: “The government is treating injuries that would be regarded as grievous bodily harm in the criminal courts as small claims. A limit of £5,000 will mean injuries including facial scarring, fractured ribs, a bruised chest and whiplash to the neck would be considered as ‘small claims’. This means people will be forced to bring claims themselves without expert legal advice.
“The MoJ does not appear to have properly considered the fact that this will clog up the court system, creating a David and Goliath situation where people recovering from their injuries, deprived of legal advice, have no choice but to act for themselves.”
Andrew Twambley, spokesman for campaign group Access to Justice, said the government “seems hell bent on removing the rights of ordinary people to gain redress for injuries that weren’t their fault”.
He continued: “Increasing the small claims limit to £5,000 discriminates against ordinary people suffering whiplash injuries and will open the doors for claims management companies and cold callers to wreak further havoc on the market…
“Insurers will be rubbing their hands in glee. They have the government in their pocket, and will themselves be pocketing any savings made, for themselves and their shareholders.
“Motor insurance is compulsory, but the millions of people who buy the product understand that, in doing so, they take out a contract with an insurer to be compensated if they are injured. The government has driven a coach and horses through that principle and insurers are complicit in helping to break this fundamental relationship with their customers.”
Stephen Cavalier, chief executive of Thompsons Solicitors – which has been campaigning hard against the reforms, particularly in relation to workplace injuries – said the government could not “even pretend that there is any justification” for the rising small claims limit.
“This is a craven capitulation to the insurance industry. The suggestion that this will lead to a reduction in insurance premiums is fanciful. The vast majority of insurers have not committed to reducing premiums and nor have they passed on an £8billion windfall from previous changes.”
He also accused the government of giving in to insurers by doubling the small claims limit to £2,000 in other injury cases. “Even the insurers’ own spokesman conceded to the justice select committee earlier this month that the increased small claims limit should not apply to workplace cases. Yet the government suggests that it is prepared to go further still for its insurance friends by holding out the prospect of applying the £5,000 limit to all personal injury claims.
“There has never been any suggestion of fraud in workplace claims and they have nothing to do with any supposed ‘whiplash epidemic’. The government has shown its true colours by siding with the powerful and the privileged few against working people and consumers.”
Damian Horan, senior partner at Moore Blatch Solicitors, said: “At a time when the NHS is facing critical financial pressures, we question the motivation of this legislation, which will impact the amount the service can recoup through injury cost recovery.
“Whilst the proposed legislation will limit the amount an individual can claim from insurance companies, the costs towards patient recovery remain unchanged, and our NHS will have to cover the difference. We recognise the need to reduce fraudulent insurance claims; however, a better balance must be struck between the proposed legislation and increasing the financial burden on the NHS.
“As the bill passes the legislative process, we call on the government to use this opportunity to increase compensation for individuals who have suffered the most serious of injuries. Any savings made from a change in whiplash compensation should address this injustice, rather than profit the insurance industry.”
The insurance industry was somewhat happier. James Dalton, director of general insurance policy at the Association of British Insurers, said: “The reforms to whiplash claims set out in the bill cannot come soon enough. For far too long claimant lawyers have been defending a system riddled with exaggerated and fraudulent claims because they have been profiting handsomely from it. The gravy train must stop.
“Motorists know that the UK’s roads have been getting ever safer, so why have whiplash style claims been rising? People want an insurance claims system that provides compensation and support to those who genuinely need it.
“What they don’t want is to be plagued by spam calls and texts from ambulance chasers, whilst personal injury lawyers continue to profit from a broken system in urgent need of reform.”
David Williams, technical director of AXA Insurance, said: “Being able to claim thousands of pounds for minor whiplash injuries that are almost impossible to verify is absolutely ludicrous and has only served to indulge the actions of claims management companies and fuel the rise of ‘a have a go’ compensation culture in the UK.
“By drastically reducing the cash incentive for these claims, the government has taken a strong stand in favour of honest motorists who will now save around £40 on their motor insurance premiums.”