The Civil Liability Act 2018, only recently implemented in May 2021 due to the pandemic, had the aim of reforming ‘whiplash claims’ to create savings for insurers and for this to be passed on to customers. This was in clear recognition of the extensive cost of whiplash claims on the insurance sector and the alleged culture of ‘ambulance chasing’ that surrounds the personal injury sector within the UK.
This introduced reforms that can be summarised as such:
- Tariff system for whiplash injuries according to how long the injury lasted
- Removal of the defendant insurer’s requirement to pay for claimant legal advice (except where losses are anticipated to be over £5,000, or £10,000 including financial losses)
- Official Injury Claim’ portal in which a claim can be registered with insurers
The tariff system is anticipated to reduce awards for whiplash claims significantly. Similarly, claimants will no longer be able to settle a claim without a medical assessment as has previously been common practice. Undoubtedly, these particular reforms are aimed at reducing the quantity of fraudulent claims and the cost of claims altogether.
The limitation on circumstances in which a defendant’s insurer must pay for claimant legal advice has more far-reaching implications. The threshold requirement is now set at £5,000 in losses from the whiplash in comparison to the previously set level of £1,000. This increase in requirement will see many claimants unable to access legal advice due to the nature of their claim being too small to qualify.
These claims can still be pursued within the Official Injury Claim portal supposedly without the need for independent legal representation. This creates a dynamic in which claimants with no legal training must navigate their own claims, including obtaining the newly required medical report. It is anticipated this will pose a barrier to many, particularly to claimants who are not IT proficient or claimants whose first language is not English. This has the effect of making whiplash claims inaccessible to a broad range of people. There are even wider implications for claimants whose insurers represent both parties in the accident in which a clear conflict of interest arises.
Beyond the impact on claimants, these reforms are also anticipated to have an effect on personal injury firms. With fewer claims being made, less work is produced and this could lead towards a shift away from this work to more profitable areas or being taken over by bigger firms. It is also anticipated that the claims market will take advantage of these opportunities to fill the gap left by legal professionals in managing whiplash claims.
Ultimately, these reforms are in pursuit of reducing the significant cost of whiplash claims within the UK. With the intention of saving money for insurers and this reaching the average vehicle owner, the government requires a summary by 1st April 2024 on how policyholders have benefitted by any reduction in costs by insurers. A saving of £35 on motor insurance premiums is anticipated and it is essential to ask whether the average person would rather save £35 or have the ability to pursue a whiplash claim with independent legal advice.