Are insurance companies really working for the dark side?
The government has stated that it intends to introduce whiplash reforms in April 2019. The Ministry of Justice has consulted numerous associations including the Motor Accident Solicitor Society (MASS), The Association of Personal Injury Lawyers (APIL) and the Law Society as part of the process of deciding the appropriate level of damages suitable for the small claims procedure. The likelihood is that the small claims limit for road traffic claims will rise from its current level of £1,000 to £5,000. This proposed change is covered by the Civil Liability Bill which you may have seen reported in the press, but do you appreciate how this might affect you?
Plans to increase the small claims limit for all other personal injury claims (apart from road traffic accidents) from £1,000 to £2,000 have recently been placed on hold.
Lord Justice Jackson, who is proposing changes to the small claims limits, has stated that his reforms are intended for the benefit and protection of those who have suffered loss and injury.
The insurance industry appears to have been very effective in convincing both the government and many members of the public that the cost of having to pay out whiplash claims and other road traffic accidents is ever increasing and unjustified. As a result of its effective publicity and lobbying campaigns, many people now believe that whiplash claims are entirely mythical and fabricated which is simply not the case, as anyone who has suffered such an injury will attest.
While the insurance industry continues to plead poverty insurance premiums only seem to rise. The latest figures published by the industry itself demonstrate that the number of whiplash claims appears to have fallen in recent times and yet, whilst insurance premiums have risen. The cost of such premiums is a combination of many factors not least of which is the soaring cost of vehicle repairs, frequently carried out by companies which are subsidiaries of the insurers themselves. Over the past 4 years the cost to motor insurers of bodily injury claims fell by some 21%, however the average motor premium rose by 20% (figures taken from the Association of British Insurers). Costs savings that have been achieved by the fall in such claims have not been transferred to the consumer.
The latest carrot to be dangled in front of the government by the insurance industry is the promise of some £35 being taken off the cost of each and every insurance premium if further changes are made to the claims procedure. Given that the earlier round of changes made no difference to the level of premiums, how much confidence can there be that any further changes will result in a lowering of premiums?
It seems likely that a new small claims portal will be established for road traffic accidents so that injured people can present their own claims through. The insurance industry has already indicated that they will not make admissions of liability in such cases because they anticipate that the bother of having to make a claim through the portal will be too much for most people, without help from a solicitor or other professional, and that such claimants will not bother to present their claims. This will, of course, achieve the desired result, namely smaller pay outs for the insurance industry. But what about those injured in road accidents through no fault of their own?
It would appear that the government has once more bowed to the pressures of the insurance companies and gone over to “the dark side”.
If there is any good that might come out of further reforms, it will be the reduction in claims management companies, who will find that they now have to be regulated by the Financial Conduct Authority.
As always seems to be the case with new legislation, the chances are that by the time of the second reading of the Bill, the proposed rules will be changed, and it remains to be seen how far reaching the changes will be.
In the meantime, anyone injured through someone else’s negligence should continue to seek assistance from firms with a proven track record of helping accident victims.
Contact – Christopher Kennett