Legal Update: Whiplash Claims: Lack of action by government on small claims limit gives time for constructive talks

Alistair Kinley

Alistair Kinley says the government’s latest motor measures have little connection to insurance claims and whiplash and there is a failure to implement Transport Select Committee recommendations.

The paper setting the government’s preferred way forward for whiplash claims was published last week, just a few days before the Motor Accident Solicitors Society conference. There almost seemed to be a collective  release of breath as the news broke.

There had been plenty of speculation that the government would increase the small claims limit for personal injury claims arising from road traffic accidents (if not in other settings). It had already increased the limit from £5000 to £10 000 for non-injury claims, and signals from ministers could be readily interpreted as supporting an increase for injury claims from the current £1000 limit. Indeed, Berrymans Lace Mawer ran a short survey of insurance clients in October and only one in four (26%) thought that there would not be an increase.

But the government press release failed to mention this. Instead, it focused on “measures to help motorists cut the cost of running a car”, which includes issues I struggle to connect easily to insurance claims and whiplash, such as freezing MOT fees until 2015, introducing fuel price signing on motorways and reviewing driving test fees. It might be argued these will hardly be of universal impact. The first will not affect anyone owning a car under three years old, the second could be of limited effect – in my experience, refuelling on a motorway is rarely a matter of choice – and the latter is only going to affect those at the very start of their driving career.

Deterring fraudsters
The government’s material also failed to implement a recommendation from the Transport Select Committee requesting it to provide “its view on the issues involved in limiting the right to compensation where it can be shown that a claim is grossly exaggerated”. The point there is the clear deterrent effect of potentially losing all of the claim because of fraud, as was confirmed in Summers v Fairclough Homes.

But what of small claims? What are the reasons for no change? The detailed response paper and the Ministerial Statement in the Commons offer some explanation, indicating that government “has listened to the views of the Transport Committee and others that now may not be the right time to raise the small claims limit because of the risks that it may deter access to justice for the genuinely injured and encourage the growth of those disreputable claims firms which so damage the industry”.

Perhaps this shows an awareness among the government of the risks of throwing the ‘genuine claims baby’ out with the bathwater of the perceived ‘have a go’ claims culture? The latter part of the quotation seems to me to be a clear reference to avoiding the prospect of claims firms taking chunks of compensation by way of contingency fees in small claims cases.

The point about deterring access to justice for genuine claimants may touch on how people pursuing their own claims are treated by the system. The judiciary is acutely aware of the rising numbers of litigants in person as a result of recent costs reforms and has issued detailed guidance to them. This is clearly a sensitive area. The treatment of – or assistance provided to – unrepresented third parties by compensators is likely to remain a point of discussion, regardless of whether or not there is any change in the small claims limit.

Productive discussions
Insurers will hardly agree with the view of Des Hudson, Law Society chief executive officer, at last week’s Mass conference. He said the recent announcement on whiplash claims and the small claims track suggest that the “high water mark” of their influence has passed. But what ended with last week’s announcement was only the speculation about the small claims track changing this side of an election – in the meantime, there is room for productive discussions with the government and other stakeholders about delivering the detailed reforms required to address the ongoing challenges of whiplash claims in a balanced and constructive way.

Alistair Kinley, partner and head of policy development, Berrymans Lace Mawer

This article was published in the 7 November edition of Post magazine

  • LinkedIn  
  • Save this article
  • Print this page  

You need to sign in to use this feature. If you don’t have an Insurance Post account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: