News feature
Insurers trying to 'make fools of government over whiplash savings' argues CILEx
CILEx has responded to HM Treasury’s consultation about how insurers will report on the impact of the Civil Liability Act reforms on their businesses.
Insurers are trying to make fools of the government by claiming that savings from the personal injury reforms enacted by the Civil Liability Act (CLA) 2018 are already being passed on to consumers before they have even been implemented, CILEx has said.
CILEx has voiced concerns that this narrative may be used to justify a failure to pass future savings on, ‘making a mockery of the promises the government made during the Act’s passage through parliament’.
CILEx is also arguing for stronger measures to force insurers to publish detailed data on the impact of reforms on their finances so that the true savings, after implementation, can be understood and seen to be reflected in insurance premiums.
In its response to HM Treasury’s consultation on how insurers will report on the impact of the reforms on their businesses, CILEx argued that the reported drop in premiums since the CLA’s passing only showed that the reforms were unnecessary in the first place, and called for ‘a direct causal link to be drawn between the Act’s implemented reforms and reductions in premiums, independent of other factors’.
CILEx is against the proposals to allow firms to self-determine whether they fall within the scope of the reporting requirements, instead recommending that all insurers be automatically considered unless they are able to provide the Financial Conduct Authority (FCA) with clear evidence that they do not meet the thresholds set.
If the government does go ahead with self-reporting, the FCA must be clear what punitive measures will be applied to those who declare wrongly.
In its submission, CILEx proposed that insurers disclose complete data sets for premiums and settlements, not just averages alone, so that the impact of the reforms could be properly understood.
It also suggests mandating that insurers provide data on their legal costs and whether reductions fall in line with the loss of legal support for injured persons. One of the central points of contention around the passage of the CLA was that unrepresented claimants would now need to go up against lawyer-represented insurers. Regulations requiring insurers to disclose their spending on legal costs in defending claims, both for external lawyers and in-house legal costs, would allow for an assessment of whether the reforms have resulted in an inequality of arms between defendants and claimants in personal injury cases.
- 'Civil Liability Act report on savings provision: consultation on implementing regulations. A response by The Chartered Institute of Legal Executives (CILEx)', available at: https://tinyurl.com/yyv3vtvr