Blog: Proposed whiplash reforms are cynical

Cynicism is behind the insurance industry's campaign to persuade the government that it's a good idea to remove access to justice for 60 million people by scrapping the right to compensation for minor whiplash injuries and raising the upper limit for personal injury claims from £1000 to £5000. 

To be clear, the industry's rationale has little to do with the notion of public good. If carried, the injured party will have to pay up to 50% of their compensation to cover their legal costs, and insurers will save money by paying no compensation whatsoever to victims who suffer soft tissue injuries. This is a massive saving, but at the expense of those who have been injured by the actions of insurers' policyholders.

Insurers say that they are merely trying to deal with an epidemic of fraud, and any savings will be entirely for the benefit of honest customers. In other words, they might pass on savings to customers, which will not be policed by the government.

For sure, in my sector there have been unacceptable practices. A very small percentage of law firms have been unscrupulous, and insurance fraud is a problem. But dismissing us all as ambulance chasers and sweeping away ordinary peoples' legal rights won't help insurers rebuild trust with the public. It will be ordinary people, not rich people, who suffer.

In my view, Allianz's Sarah Mallaby is overly fond of the word ‘compulsory' but I agree with much of her proposals for ensuring access to justice. For example, I concur that cold calling should be banned. Reducing the limitation period for claims notification forms to 12 months? Check. Sharing fraud data? Check. We would be delighted to stop representing fraudsters, if only insurers told us who they were. Fight fraudulent claims through the courts? Check. We agree genuine fraudsters need to be fined or locked up. Invest in technology to identify and tackle new fraud areas? Check.

But please, stop using misleading fraud statistics. The insurance industry classifies a policyholder who pulls out of making a claim as a fraud – that's nonsense.

Based on past experience with Colossus and Outcome Advisor Tools, I also fundamentally disagree with Mallaby's call for ‘the compulsory use of software-based damages calibration tools or an agreed tariff to assess general damages'. This software is designed to reduce the cost of running the claim and reducing the damages paid out for lower value claims. There is no need for empathetic, experienced claims handlers. A junior fills in a tick box questionnaire, inputs it into the machine, and hey presto, out comes a low ball valuation that would make any claimant's eyes water. The software is selected by and populated by data inputted by the defendant insurer.

It's a win-win for the insurer: low damages calculation and cheaper running costs. What's more, the file handler is refused discretion, so the claimant either accepts it or has to undergo the worry and delay of going to court.

For software-based tools, read cake. Mallaby is following the Boris Johnson line on cake: pro having it and pro eating it too. But the truth is that good government, and good outcomes, are predicated on sometimes messy compromise.

A2J seeks compromise: retaining the right of redress for ordinary people, yet encouraging a cross-industry, targeted effort to share data, stop fraud and remove the scourge of cold calling. Compromise obviates the sledgehammer of legislation and its unintended consequences, and it's the right thing to do by British people. So can the people trust insurers to play the ball, and not the man?

Andrew Twambley
Spokesman, Access 2 Justice