Mass’s Sue Brown on why the whiplash tariff should be reviewed annually

Motorists have had a raw deal in the last three years. 

Their motor premiums have shot up – by 40% in the last year alone according to Confused.com – but if they are unfortunate enough to be involved in a motor accident, their ability to seek fair compensation from the liable party has dramatically fallen. Not only are the sums awarded now significantly below those for the same injury if it were to take place anywhere apart from in a motor vehicle, but, as the figures testify, their ability to access legal advice has significantly reduced since the reforms.

It is of, course, three years since the Civil Liability Act (2018) was implemented. Some may be sick and tired of hearing the terms, but the simple fact is that the fundamental principles of access to justice and equality of arms been damaged, perhaps irreparably by the reforms.

The Act should be amended at the earliest opportunity to introduce an annual review to better and more quickly reflect inflationary increases and so lessen the unfair impact on consumers. Or be repealed.

The impact of the changes on the consumer’s ability to access justice should not be underestimated. A significant amount of work and understanding is required before the ‘use’ of the tariff is even experienced. As the data clearly shows, more than 90% of claimants are not able to, or do not wish to pursue their own claim, preferring to obtain legal advice from a professional, who can assist with their claim and advise them on what they are entitled to.

One of the issues at the heart of the problem are the low levels of the tariff. Should a litigant in person be unable to pursue their own claim through the OIC and wish to obtain legal advice and assistance, the prospect of such poor compensation could result in legal assistance simply being unaffordable. By design, the current tariff levels make deductions from client damages difficult or unworkable, ensuring that fewer lawyers are able to support litigants. It is little wonder that so many now no longer offer support for supposedly low-level injured claimants.

The Ministry of Justice’s statutory three-year review into the tariff of damages for whiplash claims has recently closed. A report is due before Parliament before the end of May. No one, least of all on the claimant side, is expecting a radical departure from the current sorry state of affairs. The review itself has been constructed, in effect, to consider a single issue and outcome – an inflation-only increase to the tariff of damages. Only lip-service has been paid to seeing the tariff within the wider context of the reforms and their impacts on consumers.

But playing along with the review and focusing on the inflationary impact on the tariff, it should be obvious that the dramatic increases in inflation since the introduction of the tariff of damages has led to a clear and damaging denigration of the compensation awarded.

Lord Wolfson of Tredegar, the former Justice Minister, told the House of Lords on 26 April 2021 that the updated tariff was increased by “about 11%” to add a “three-year future-proofing element to ensure that they do not move out of alignment with future inflationary pressures”. Yet since June 2021, CPI has increased by a smidgen under 19%. A difference of 8% may not sound much, but looking at it another way, the “future-proofing” attempt was out by nearly 60%.

Without the compounding of regular increases, compensation will continue to fall further and further behind. The baseline needs to be recalculated by that 8% just to catch up with the deficit. Insurers can increase their premiums to account for wider economic and other factors. The injured consumer cannot.

Of course, the tariff should be uplifted, beyond any CPI increase, to better reflect equivalent judicial awards for the same injuries suffered outside a motor accident. At the very least, the review should result in the raising of the tariff to account for the 8% deficit ahead of a new best guess to cover inflation for the next three years.

What is really needed is a fundamental review of the operation and impacts of the Civil Liability Act, including the tariff. The Act should be amended at the earliest opportunity to introduce an annual review to better and more quickly reflect inflationary increases and so lessen the unfair impact on consumers. Or be repealed. Either way, this regrettably have to wait for another day and another government.