The long-awaited motor reforms will arrive on 31 May. The reforms are being delivered through a combination of legislation changes and the implementation of a dedicated claims portal which must be used for all claims falling within the reforms. What are the details? And what will the impact be to access to justice? We asked Samantha Brown, Head of Personal Injury at DAS Law, to take a look...
The whiplash reforms: What are the headline changes?
It was originally understood that the intention of the reforms was to change how claims resulting from whiplash injuries would be handled. However, the reforms have a far wider reach and will in fact impact lower value claims arising from other types of injuries as well. By bringing these types of injuries within the remit of the reforms, it is clear that many injured people with injuries other than whiplash will find themselves navigating through complex areas of law.
The reforms increase the small claims limit for personal injuries arising from road traffic accidents from its current limit of £1,000 to £5,000. This would mean that the claim would need to be of a higher value than £5,000 to recover legal costs from the other party. A new dedicated claims portal (for all claims where compensation for injuries is less than £5,000 or £10,000 including all financial losses) will be launched with the intention that the injured person will handle their own claim. However, by increasing the limit to £5,000, claims other than whiplash will be caught by the reforms.
There will be fixed tariffs for damages for pain, suffering, loss of amenity for whiplash claims but other injuries caught by the reforms will need to be valued using the traditional method of the Judicial College Guidelines and research of relevant case law. The changes will not affect claims for vulnerable road users such as cyclists or pedestrians.
Why has there been so much discussion surrounding this?
The government has acted out of concern for what they see as a compensation culture resulting from whiplash claims following motor accidents. There have also been concerns raised relating to the legal costs involved in pursuing these claims (despite the legal costs being reduced significantly through previous reforms). The government is also seeking to address the concern that the existing system is open to exploitation by fraudsters, particularly the ability to claim compensation for injuries in the absence of medical evidence. The new reforms will prevent any claims for whiplash being settled without a medical report.
In real terms, what impact would an increase in the small claims limit have?
By increasing the small claims limit for personal injury claims arising from road traffic accidents from £1,000 to £5,000, the cost burden of pursuing an injury claim firmly shifts to the claimant unless they have a legal expenses insurance policy that covers small claims. Anyone who does not have a legal expenses insurance policy will either need to pursue the claim themselves or enter into a funding arrangement with a representative that will see them pay a percentage of their rightful compensation to their representative.
So ordinary people will find it harder to make legitimate claims for injury?
Potentially, yes. The CEO of the Motor Insurers Bureau has described the new approach as being “.…designed to facilitate a simple, secure and supportive process for injured victims to get appropriate compensation for their claim, without the need for legal support,” but the worry is that, for many, the absence of legal support will be a barrier to justice. This is of particular concern in relation to vulnerable individuals.
What about the proposed tariff on compensation for whiplash injuries lasting less than two years?
This will significantly reduce the likely injury compensation for many genuine whiplash claims, and those without access to legal expenses insurance (LEI) will find themselves in a position where the cost of instructing a lawyer to assist them, will further reduce their compensation.
You mention legal expenses insurance. Do you think that will that become more important?
Absolutely. The changes will potentially have a detrimental impact on claimants given their inability to claim legal costs. Those who do not seek legal representation, paying a percentage of their damages in respect of this, may struggle with the knowledge of how to clearly value and understand their claim, and the requirements for evidence of fault and medical evidence to support a claim for personal injury. They may also need to represent themselves at a court hearing.
Without legal support there will inevitably be concerns for those with genuine injuries being confident and able to purse their claims, who may therefore ‘give up’. Having LEI means having access to legal support, from experts, who will be able to support and guide the injured party through the claim process.
Can’t people just enter into conditional fee agreements (CFAs) with a solicitor?
There will still be funding arrangements available for those who do not have LEI, but it is likely that these funding arrangements will work differently and could result in a higher percentage of compensation being paid to the legal representatives. In addition, it is likely that those entering into these types of arrangements will play a more active role in pursuing their claim as firms look to minimise their costs.
What about non-whiplash injuries and the other elements of a claim?
Non-whiplash injuries will still need to be valued in the traditional way, with reference to specialist legal guidelines and with the assistance of relevant case law. Our concern is not just that this can be a complex area, but also that the litigant in person is unlikely to have access to this information.
We are also concerned that claimants will be vulnerable to their claim being under-valued without the support of a legal representative. For example, financial loss claims arising from a motor accident can be complex and require expert advice on both the calculation of the compensation and the evidence required. The financial hardship that this could have, particularly on claimants who are self-employed or run small businesses, could be severe.
We are also concerned at the increased likelihood of disputes in this area, which will see the unrepresented claimant representing themselves at a court hearing where the defendant insurer will have the benefit of legal representation.
How will the changes impact the PI market? And support claimants?
Adjustments will be needed in the way lower value motor PI claims are managed, and law firms committed to the market will continue to provide support albeit it is likely to change significantly from the way in which support is currently provided; particularly where the claimant does not have legal expenses insurance. It’s likely that we’ll see a contraction in the number of legal firms offering PI services and where that happens, ‘Access to Justice’ will become more challenging.
Disclaimer: This information is for general guidance regarding rights and responsibilities and is not formal legal advice as no lawyer-client relationship has been created. Note that the information was accurate at the time of publication but laws may have since changed.