The facts
Since 2010:
Claimant’s lawyer’s fees payable by insurance companies have been slashed by an average of 60% and are now fixed at £500 for road traffic accident injury claims worth up to £10,000.
Claimants have been made to pay the rest of the legal fees out of their own compensation usually limited to 25% of compensation.
Lawyer costs for all claims under £25,000 relating to road traffic accidents, accidents at work and public liability incidents have been fixed and limited to as low as £900.
Claimants have been made to pay the cost of their own legal expenses insurance policy to cover their claim. Previously this cost had to be paid by the insurer of the at-fault Defendant.
Strict liability for breaches of health and safety regulations by employers has been removed. Claimants injured at work now have to prove that the employer didn’t just breach the regulations but negligently did so, which is a much higher threshold and will often be dependent on the evidence available, which will usually be in the employer’s possession.
Claims by injured children are much less likely to be taken on by lawyers as deductions from a child’s compensation are generally not permitted by the Court so solicitors cannot get paid for their time.
Defendant insurers can now apply to have a Claimant’s claim struck out if any aspect of their claim is found to be fundamentally dishonest (not as high a test as fraud). Furthermore, Claimants will be ordered to pay costs in that scenario.
Claims for injuries following road traffic accidents (RTA) have fallen by 50,000 a year.
96% of all RTA claims succeed which is hardly indicative of a high level of fraud.
The Government’s DWP department is now receiving £10 million a year less in recovered benefits. Where an injured claimant receives benefits following an accident, a defendant insurer has to repay those to the DWP in a successful claim.
No independent evidence has ever been produced on the levels of fraudulent personal injury claims. Only insurer reports have ever been cited by the Government and the insurer’s definition of ‘fraud’ includes cases that are dropped or withdrawn.
Court fees which are payable by the Claimant in the first instance have been increased by up to 600% meaning that a Claimant injured by a negligent driver with injuries and losses worth £200,000 would now have to pay a £10,000 court fee to start their claim!
In practice
In all cases of fraud of fundamental dishonesty, the Defendant insurer should successfully defend the claim and recover their costs = fraud should not ‘cost’ insurers anything!
Many genuine Claimants are intimidated by threats made by Defendant insurers to this effect. Note – Defendants and their insurers face no such similar sanctions for dishonest defences.
Defendant insurers engage in the common practice of making early offers of compensation to injured victims without requiring any medical evidence of injury – how does this help tackle fraud? It doesn’t, it simply encourages the perception that it’s easy money and encourages people to have a go. The insurers then use this attitude to ask for changes in the law to make it ever harder for genuine claimants to recover compensation that they’re entitled to.
The insurance industry has made £2 billion in savings since the 2012 personal injury reforms and consequent reduction in claims and yet insurance premiums have increased by 20% and are projected to increase again next year. The insurers simply blame their increased premiums on whiplash claims rather than their own ever increasing share dividends and profits.
The insurers promised to pass on savings via lower motor premiums following the 2012 reforms and failed to do so. They’ve promised to do so again this time round but the Government confirms that it will not put in place any way of enforcing reduced premiums.
Further damaging reforms proposed
The Government and insurers now want to prevent injured claimants from any entitlement to legal costs for claims worth up to £5,000 (this would include injuries such as leg and arm fractures). They also want to cap compensation for injuries lasting up to 9 months to around £400 with a bonus £25 for any psychological impact!
For a helpful summary of the proposals see the Law Gazette’s recent article here.
The effect will be that no one will bother to claim compensation for injuries lasting up to 9 months! Furthermore, as injured claimants will be aware that they will not recover any legal costs for claims up to £5,000, they will be put off from making claims for more significant injuries as few will want to take an insurance company and their legal team to court.
Those that do claim will end up accepting the first offer they receive from the insurer which will almost certainly be less than they would have received if they had been able to instruct a lawyer.
The Government has confirmed that the public will lose out on over £400 million a year in injury compensation as a result of the proposed further reforms. That is a CONSERVATIVE estimate.
The result:
- LESS CLAIMS WILL BE MADE
- Those that are made will see LESS DAMAGES PAID OUT
- INSURERS SAVE BILLIONS
- Motor Premiums will drop for a year or two before increasing again; and then
- INSURERS MAKE BILLIONS MORE
The latest reforms have been proposed by the Ministry of Justice and your Lord Chancellor, Liz Truss, who is responsible for improving the justice system to make sure it better serves the public. Tell me Liz, exactly who do these further attacks on the public’s access to justice best serve? Not the public and not the Government! So why give so much favour the insurers!? Anything to do with the marked increase in Tory Party donations by insurance companies over the last decade?
Now would also seem to be a good time for Liz Truss to try and divert attention away from Brexit, the prison system chaos and her inability and unwillingness to stand up for the Judiciary in the face of vilification by the press.
When was there last a reform to the civil justice system which was for the benefit of the genuine claimant?
Suffolk Solicitor 