The government published the Prisons and Court Bill on 27 February 2017 which included provisions to introduce:
- fixed tariff compensation on road traffic accidents (whiplash and minor psychological injuries);
- a ban on pre-medical offers (road traffic accident whiplash claims).
The government has also announced its plans to increase the small claims limit, which has not changed since 1991. Ministers consider it necessary to review the track (the value of a claim) to crackdown on alleged fraudulent and exaggerated whiplash claims, further to the Whiplash Reforms. The proposed changes could see the track rise from £1,000 to £5,000 for road traffic accident claims, and £2,000 for other personal injury claims.
The Ministry of Justice believes that the reforms will reduce motor insurance premiums by around £40 per annum, citing a 50% increase in whiplash claims over the past ten years. However, there is no guarantee that these savings will actually be passed on to motorists. There have been a number of reforms in the personal injury industry yet there is no real evidence to show that the consumer has benefited from the changes.
Neil Sugarman, president of the Association of Personal Injury Lawyers (APIL), has previously commented that "Data from the insurance industry shows that since 2013, the annual cost of motor-related personal injury claims has fallen by £536 million yet insurance premiums have continued to rise”.
It is easy for insurers to rely on the public’s unfavourable attitude towards a 'compensation culture' but in reality it is questionable whether such a compensation culture actually exists. The proposed changes undermine access to justice for the ordinary person. Claimants could be left without legal representation, and receive inadequate compensation for genuine injuries as a result of a higher small claims limit and a fixed tariff scheme.
Fortunately, the surprise general election announcement has put a halt to the changes and the Bill will not proceed until after the election has taken place. However, the issue is likely to be revisited after the election, leaving the future of small claims uncertain.
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