Motoring ahead
As new whiplash reforms come into force, CILEX practitioners from both sides of the fence give their views on the impact so far
On 31 May, changes to the claims process for low-value road traffic accident (RTA) related personal injury claims (‘whiplash claims’) came into force. The reforms apply to claims worth no more than £5,000, now deemed small claims, and are now processed online, through the Official Injury Claim (OIC) portal, without (in theory) needing to go to court or secure legal representation.
The reforms have sparked widespread controversy amongst personal injury lawyers who argue they will yield savings for the insurance industry at the expense of injured claimants. Insurers counter that the reforms will combat illegitimate claims and drive down legal costs, reducing motorist insurance premiums.
Laurence Shaw, CILEX Fellow and legal consultant gives the claimant lawyer’s perspective:
The new whiplash reforms unashamedly favour motor insurance companies: reducing compensation awards and abolishing the chance to recover legal costs in the majority of RTA claims.
Whiplash injuries are now valued according to a fixed tariff. No legal costs can be included in the cost of a claim and claims must now go through the OIC portal.
Another change introduced by the reforms is a ban on pre-medical offers of settlement in affected claims. This means that offers to settle a claim can no longer be made before a medical report on whiplash injuries has been obtained.
In practice, this will lead to lower compensation for claimants who, without legal advice, have been left to negotiate the new portal system unaided. Worse still, some injured RTA victims may well give up altogether.
‘Whiplash capital of the world’
These changes aim to tackle a supposed whiplash culture. Five years ago, the UK was apparently the ‘whiplash capital of the world’, which indirectly led to these reforms coming about.
The Association of British Insurers stated that 1,500 whiplash claims were made every day and argued that not all of them were legitimate. However, data shows that the supposed whiplash culture is a fiction. Figures from the government’s Compensation Recovery Unit show that the number of claims has been steadily falling for years. Nevertheless, the government ploughed on with these reforms regardless.
My view is that the claims portal is too complicated. We are seeing potential claimants now having to deal with a complex online portal, relying on a 64-page guide described euphemistically by one consumer support organisation as ‘legal treacle’. The portal has already had number of technical difficulties for professional users, so it doesn’t bode well for claimants.
Promises that the reforms are a big win for consumers are misguided
When faced with a daunting and complex process and the difficulties associated with making a judgement on whether their claim is worth more or less than £5,000, it is inevitable that many will simply give up, leaving them without any redress.
Insurance companies claim the money they save as a result of the new reforms will find its way back to consumers through lower car insurance premiums. My view is government should force insurance companies to pass on these savings, otherwise the only people to gain from the reforms will be their shareholders and cold callers from claims management companies offering to help people negotiate the portal at a cost. Certainly not the actual injured party.
The Motor Insurers’ Bureau, which was at the heart of these reforms, suggests that the new legal process is easy and straightforward but many who have begun using it over the past few months will disagree.
Promises that the reforms are a big win for consumers are misguided. They may help to control the costs to an extent but will not ensure that proportionate compensation is paid to genuinely injured claimants.
These reforms will remove legal expenses from many small motoring accident claims, but we wait to see whether the promised savings on car insurance premiums are eventually passed onto the motorist.
I am not holding my breath.
William Balfry, CILEX Fellow and senior associate at DWF gives the defendant lawyer’s perspective
As I write, the OIC portal is nearly three months old. As yet no formal data has been made available. Having been spoilt by the regular data provided by the portal company for the Ministry of Justice (MoJ) portal, practitioners are left to read between the lines and glean what they can regarding numbers and behaviours. The experiences I refer to are therefore largely anecdotal.
The lack of data is compounded by the fact that not everyone is using the system yet. A great deal of claims have so far come from two large claimant firms but there are a number of key players in the market 'missing in action' in terms of SCNF (small claims notification form) submissions, leaving insurers to speculate on the reasons behind this.
It has come to light that various claimant firms have had issues with submissions to the OIC but this is now apparently back on track, so numbers should rise from here.
From a defendant perspective, we are hearing reports from clients that there are a number of common issues with starting the process, including claims being submitted to the old portal which should in all likelihood have been placed in the OIC.
Rise in additional injuries
We understand that additional injuries are being claimed on up to 80% of cases, along with the minor psychological uplift. There are also a high number of claims for 'exceptional circumstances', arguing for a 20% uplift.
Insurers have for some years worried that the number of non-whiplash injuries raised would rise rapidly, causing the reforms’ impact to be diluted
SCNFs are being presented with very little information, which also causes issues when an insurer response with statement of truth is required over a short period. The numbers of litigants-in-person is being estimated at 15% of claims, although the figure for 'true' litigants-in-person outside direct capture by insurers dealing with their claims may be much lower.
Of the problems envisaged with the new portal, insurers have for some years worried that the number of non-whiplash injuries raised would rise rapidly, causing the reforms’ impact to be diluted. Early indications from the data collated by clients since the inception of the portal appear to bear this out, with a high frequency of multiple additional injuries – knee, elbow, chest and headaches all appear popular.
Claims in limbo
It may be many months until what happens with this type of claim is established, as there is no established methodology currently to value combined tariff and non-tariff injuries. It will take a Court of Appeal case (or bundle of cases) to lay down guidelines to the lower courts and – even with leapfrogging – this could take well over a year.
Until then, cases are either left in limbo or settled on the proviso that it might not be using the method chosen by the Court of Appeal, which is risky.
In terms of the impact of the new OIC on the existing MoJ Portal, figures for July 2021 were at the lowest level since records began and not all of this can be laid at the door of Covid – clearly the OIC is having an impact already.
Whether the combined numbers will ever reach previous levels is uncertain as some lawyers leave the personal injury arena (or at least the RTA one), but it will be interesting to see how the numbers look in a few months' time. The teething issues are bound to continue but the technical issues appear to have been largely resolved.
From a defendant perspective, one the most pressing problems appears to have been fixed, that of re-assigning claims allocated against an incorrect insurer. If the two sides of the industry continue the co-operative approach that has mostly persisted through the past 18 months, it will bring benefits, but only time will tell.
Laurence and William are both advisers to the CILEX personal injury specialist reference group (SRG). For more information on the SRG’s work, or if you wish to join, visit our SRG web page or contact personalinjury@cilex.org.uk
