Analysis: Whiplash bill faces bumpy ride through parliament

parliament

Vocal opposition to the Civil Liability Bill is ramping up as MPs prepare to debate it in its second reading.

Insurers have been pushing for the whiplash and discount rate reforms.

A recent survey commissioned by the Association of British Insurers showed that a majority of the public back the changes.

However, some are not convinced. Access to Justice argued that the survey’s question set was “loaded”. The ABI has denied its allegation.

The campaign group contends that the bill will not get an easy ride. Whiplsh reforms have already been delayed until 2020.

The Labour Party is said to be no fan of the bill, while Post understands that upwards of 20 Conservative and SNP MPs have misgivings towards the reforms, though only MPs from England and Wales will have their say on the proposals which will not affect Northern Ireland or Scotland.

Labour MP Gloria de Piero told Post: “The government’s Civil Liability Bill is a capitulation to interests of big insurance companies at the expense of working people.

“In the face of billion-pound profits for the insurance industry, the government is trying to slash compensation and restrict access to justice for people injured through no fault of their own.

“As part of their so-called ‘wider package of measures’ that includes raising the small claims limit for personal injuries in the workplace, the Civil Liability Bill is nothing more than the government’s latest attack on workers’ rights.”

Tariffs and Small Claims Limit

Two of the most contentious aspects that come with the bill are not part of the bill itself.

The proposed increase to the Small Claims Limit from £1,000 to £5,000 for road traffic accidents and from £1,000 to £2,000 for all other cases, in addition to the tariff system, are expected to be enacted through secondary legislation known as a statutory instrument. This means that the changes will not be debated in parliament, though campaigners have vowed to push for an amendment on this.

Conservative MP Bob Neill has previously expressed concerns about the raising of the Small Claims Limit. Following the Justice Committee’s examination of the proposals, Neill said in May: “Access to justice, including the right of access to the courts, is a cornerstone of the rule of law but these reforms risk putting that right in doubt.

“We share strong concerns that were raised during our inquiry on this issue, including concerns about the financial and procedural barriers that claimants might face.

“The Ministry of Justice has made some welcome moves to develop the electronic platform to compensate for claimants’ anticipated lack of legal representation. However, we remain to be convinced that this will be effective or sufficient.

“This is a vitally important point of principle on which the government should reflect. The small claims limit for personal injury should not be increased unless ministers can explain how it will make sure that access to justice is not affected.”

Industry concerns

The reforms met with contention when they went through the House of Lords. Unions, campaign groups and associations on both sides have been hard at work lobbying, and MPs are expected to try to push for some changes.

If they are successful then this could spell trouble for the industry, with the Bill’s potential to cut down claims costs potentially being watered down.

Forum of Insurance Lawyers CEO Laurence Besemer said: “The provisions on whiplash have proved controversial in the Lords: they have faced considerable challenge; the government has added additional provisions  to the face on the Bill following criticism from the Delegated Powers and Regulatory Reform Committee; and the definition of claims covered by the Bill has been amended three times.

“On the basis of comments in the Lords it is likely that at Second Reading MPs will take the opportunity to spell out further changes they wish to see to the definition, to the tariff and to the Small Claims Track limit, with the potential for other issues to be raised.  

Foil believes that any weakening of the proposals, particularly around the definition and the tariff, will seriously affect the potential for the Bill to reduce claims and costs and deliver the savings to policyholders which the government is seeking. It believes that concerns at the increase in the Small Claims Track are misguided particularly in view of the concessions made by the government in the Lords following the Justice Select Committee report, allowing more time for the new electronic platform to be developed and thoroughly tested, delaying the introduction of the new regime until 2020. The outcome of Second Reading is keenly awaited by all parts of the claims sector.”

Unions unconvinced

Unite, the UK’s largest union, has come out with a blistering attack on the proposals to increase the Small Claims Limit.

It argues that injuries that are likely to fall below the £2,000 limit include minor brain damage, psychiatric damage, a collapsed lung, food poisoning, a broken nose and the loss of some teeth.

People who work in driving roles, it says, would be hit with a “double whammy”. Instant death, some post-traumatic stress disorders, minor eye injuries, toxic smoke and fume inhalation, a broken wrist or some facial disfigurement are just some of the ailments that could slip under the £5,000 limit’s radar, according to the union.

Unite assistant general secretary Howard Beckett said: “The government is shielding dangerous bosses from justice. Bad bosses who play fast and loose with workers lives will be able to escape paying compensation on the majority of workplace injuries.
 
“The proposed changes will save the government’s friends in the insurance industry millions in compensation claims, which is nice work if you can get it, while making workplaces more dangerous.”
 
He added: “Drivers and other road workers are facing a double whammy with their limit being set at £5,000 meaning they could be killed and their loved ones denied any compensation. 
 
“Trade union personal injury cases are one small measure through which workers who are injured at work as a direct result of bosses’ actions can achieve justice.”
 
“If workers can’t receive compensation for their injuries, they will also be denied claiming compensation for loss of earnings. Bad bosses will know that even if they injure a worker they won’t have to pay them their wages while they recover,” Beckett continued. 

Beckett added: “Previously in cases such as asbestos diseases it was only the sheer weight of claims for lower levels of damage which finally forced the government to act to ban the substance. 
 
“Developing areas of serious workplace dangers such as aerotoxic incidents and exposure to diesel fumes, are much less likely to be tackled if workers can’t claim compensation for damage to their health.”

“Illogical” tariffs

Campaigners have argued the government should consider amendments to the bill so that vulnerable road users are not affected by the tariff and limit, which are designed to reduce the impact of whiplash fraud.

Access to Justice supports this. However, this tweak to the bill would reveal just how “illogical” the overall proposals are, according to spokesperson Andrew Twambley.

Twambley told Post: “If you have a broken collarbone, you will get a considerably different amount whether you are walking on the pavement or in the back of the car. You would probably get £300 in the back of the car or £3250 if you trip over in the street and break your collarbone.

“It is the same pain, it is the same injury, it has the same effect of stopping you picking your kids up or stopping you bathing your grandchildren, but considerably different amounts attached to it. And the government is afraid that will be exposed and show how illogical the whole thing is.”

Examples of how the changes would affect claimants

If the proposals go through in their current form, a pedestrian or cyclist injured in a road traffic accident that wasn’t their fault would have to pay for a lawyer if the claim was below £5,000. At the moment, the at-fault insurer would pay.

In another example, if person A developed a neck injury in a non-fault RTA he would be entitled to £3,5000 for an injury lasting 24 months and have to pay legal costs. However, if he sustained the same injury at work he would be entitled to £6,500 and be able to recoup legal costs.

A 12-year-old passenger who receives severe bruising or whiplash injuries from a car accident that wasn’t the driver’s fault would see their compensation slide from £2,000 for a three-month injury to £235 under the new system.

(Source: Access to Justice)

Access to Justice argues that there will be 40% less accident claims in 2020 than in 2015 when the reforms were first announced.

It has argued that the Small Claims Limit should increase marginally in line with inflation, to around £1500. In addition, any tariffs should be for the lowest value claims, with numbers set independently of the government.

It also wants further safeguards in place before the new system comes into play. It wants the portal to be fully tested and piloted before a wider launch.

It argues that the before-the-event legal expenses market needs a shake-up before any change can happen. It also wants Insurance Fraud Taskforce recommendations to be implemented, and the government to complete its formal review of the Legal Aid Sentencing and Punishment of Offenders Act.

Twambley said: “No wonder giant insurers are lobbying hard for the government to pass this flawed policy into law. Insurers will increase their profits by up to £600m annually because they won’t have to pay for the costs of legal advice for non-fault accident victims.”

“The government’s earlier reforms have been wholly successful in driving down claims, so why are ministers persisting with a reform that punishes genuine claimants and creates massive confusion? The beneficiaries will be insurers, and claims touts looking to make a fast buck by filling the void left by legal firms.”

He added: “The Justice Select Committee has called for compromise, the Transport Select Committee has called for compromise, and the House of Lords has called for compromise. Other representative bodies – from Cycling UK to USDAW – have called for compromise.

“Meanwhile the Ministry of Justice stands shoulder to shoulder with insurance companies and the ABI, when it should be standing up for injured people.”

Savings scrutiny

Although leaders representing 93% of the motor market underwritten by ABI members have pledged to pass on whiplash savings, not everyone is convinced that insurers will honour their promises.

If the bill does pass in a form that is palatable to insurers then some expect to see the government take insurers to task to make sure that any savings are delivered to the public.There is also the possibility that there will be a greater monitoring of premium prices and other factors, such as insurance premium tax and vehicle repair costs. If this leads to damning conclusions, then this could translate to reputational damage for the industry, according to law firm Weightmans partner and head of insurance Rob Williams.

Williams told Post: “The increasing noise from those opposed to the bill would suggest that there will be a lively debate tomorrow. There may be further attempts by those opposing the bill to have the proposed damages tariff removed from part one, leaving it up to the courts to determine damages. However, that would remove one of the core elements of the bill and so it seems unlikely that this will succeed.

“There appears to be a degree of consensus around the broad principles of the discount rate provisions, so there must be a likelihood that this bill will ultimately hit the statute books in some form or other.  The question is what concessions might be made along the way in order to get it there and whether this includes significant changes to the whiplash provisions. 

“The issue of the Small Claims Track limit is not addressed within the bill itself. Even though the figures in the tariff for whiplash damages are to be set separately by the Lord Chancellor, these continue to feature heavily in the debate and it may be that the government will end up making concessions on those fronts, in order to get the bill through. We might see the possibility of vulnerable road users being excluded from any adjustment of the Small Claims Track limit.  The government might even go as far as to consider higher tariff figures and a more modest adjustment to the track limit.  However, the greater the concessions on those fronts, the less effective the bill will be in delivering on its objectives.

“The process of assessing the impact of the Bill will need to be a sophisticated one.  The costs of claims is only one of many factors impacting on insurance premiums.  IPT tax and the cost of vehicle repairs are examples of other significant factors that will have an entirely separate and distinct influence over average motor insurance premiums going forward.  If the provisions do not recognise such complexities and the impact assessment is perfunctory, we may end up with a skewed picture of how effective the provisions of the Bill prove to be, which would not serve to assist further reform of the civil justice system in the future.”

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