You may have heard that the Government is planning to reform the way accident claims are dealt with. The reforms are due to start in April 2020. The insurance companies have campaigned to the Government for many years to introduce these reforms in order to reduce the number of claims and so increase the insurance companies’ profits. The Government has now granted the insurance companies’ wishes at the expense of the rights of innocent accident victims.
In our view, the reforms will punish innocent accident victims in three main ways:
1. The compensation you receive if you have been involved in a road traffic accident will be fixed at a significantly lower sum than you can claim now;
2. It is unlikely, especially if you have been involved in a road traffic accident, that you will be able to use a Solicitor to fight your case for you and you will have to fight the insurance company for your compensation on your own via an on-line Portal. You will also have to arrange your medical examination in order to obtain a medical report detailing your injuries;
3. As a result of the above two points, it is likely that most people who are injured in accidents, especially road accidents, will simply not bring a claim and won’t claim any compensation at all. This will mean that, as well as increasing insurance companies’ profits, any medical treatment that is needed will have to be provided by the NHS rather than be paid for by the insurance company (as it is now). This will, of course, increase the burden on the NHS, both financially and in terms of patient numbers, but will also cause delays in obtaining medical treatment.
These reforms will affect every innocent accident victim after April 2020 and will deny them access to justice.
What is the system for making a claim now?
At this time, all accident claims are dealt with in three “Tracks”:
Small Claims Track:
This Track is for injury claims with a value of less than £1,000.00 (i.e. injuries lasting for less than a few weeks). The Claimant can recover compensation up to £1,000.00 for injuries plus legal costs in the sum of £80.00 and the cost of any expert or court fees. This Track is designed for low value, straightforward claims that will be dealt with relatively quickly and easily. This Track is also intended to discourage the use of Solicitors as only minimal legal costs can be recovered;
This Track is for injury claims with a value of more than £1,000.00, but less than £25,000.00. This will cover injuries lasting for more than a few weeks up to relatively serious and complex injuries and losses. The Claimant can recover compensation within this range of values plus fixed legal costs. In addition, the Solicitor will usually charge a Claimant 25% of the compensation in respect of legal fees;
This Track is for all other injury claims i.e. long-lasting, complex injuries with a value above £25,000.00.
(N.B. The above explanations are general explanations and do not include full details, for example regarding financial losses. If you would like to discuss the way claims are dealt with now in more detail, please call us on 0161 749 9000.)
The majority of injury claims have a value between £1,000.00 and £5,000.00 and therefore most claims for injuries now will be dealt with in the Fast Track.
The value of the injuries for claims in all Tracks is assessed on the basis of medical evidence using court guidelines. These guidelines are called the Judicial College Guidelines (see table below) and these have been set by the courts.
Therefore, at the moment, Claimants will use the services of a solicitor to obtain the evidence in support of the case, assess the value of the case and then negotiate a settlement to the claim with the Defendant’s insurance company. The Claimant will then receive the compensation they deserve and which reflects the injuries they have suffered. Also, the Solicitor will receive payment for the work they do.
What are the Government’s injury reforms?
The Government’s reforms are contained in the Civil Liability Bill and are in two main parts:
1. All Claimants must obtain a medical report to settle a case;
2. A tariff system for whiplash injuries suffered in road accidents will be introduced.
N.B. A whiplash injury covered by these reforms is a soft-tissue injury to the neck, back or shoulders lasting less than 2 years.
N.B.2. The reforms do not apply if you are a pedestrian, motorcyclist or cyclist.
In addition and at the same time as introducing the Civil Liability Bill, the Governments will increase the Small Claims Limit for road accidents to £5,000.00 and for workplace accidents, slips and trips etc, to £2,000.00;
What will happen when the reforms are brought in?
It is estimated that over 90% if all injuries resulting from road accidents have a value between £1,000.00 and £5,000.00. Therefore, when the new system is brought in April 2020, the vast majority of all cases will be dealt with as a Small Claim and be subject to the tariff system.
This will dramatically reduce the amount of compensation that can be claimed and will therefore prevent Claimants from using a solicitor to act for them against the Defendant’s insurance company. This will mean that Claimants will have to act alone against the Defendant’s insurance company. There will be no short-cuts in this new system – a Claimant will still have to obtain a medical report and provide documents to support their injuries and losses and will have to submit the claim via an online-portal (see below).
The impact of the tariff system on the value of claims for injuries caused by road accidents can be seen from this table:
|Injury lasts for:||2015 average payment
for road accident injuries:
|Judicial College Guidelines
(2015) for the value of injuries:
|Proposed tariff amounts
(N.B. These may not be the same in the final act):
|0 – 3 months||£1,750.00||Few hundred £s to £2,050.00||£225.00|
|4 – 6 months||£2,150.00||£2,050.00 – £3,630.00||£450.00|
|7 – 9 months||£2,600.00||£2,050.00 – £3,630.00||£765.00|
|10 – 12 months||£3,100.00||£2,050.00 – £3,630.00||£1,190.00|
|13 – 15 months||£3,500.00||£3,630.00 – £6,600.00||£1,820.00|
|16 – 18 months||£3,950.00||£3,630.00 – £6,600.00||£2,660.00|
|19 – 24 months||£4,500.00||£3,630.00 – £6,600.00||£3,725.00|
N.B. The Tariffs as listed above may be amended when the reforms start, but these are the proposed Tariffs.
As you can see, for injuries lasting for less than two years, the compensation awarded to Claimants will be significantly lower than now. These types of injuries are the vast majority of injuries caused by road accidents.
Other accident injuries:
Injuries caused in other accidents, for example in the workplace, in shops or supermarkets, on the street etc, are not included within the tariff system and the value of the injuries will be assessed in line with the Judicial College Guidelines (as per the figures in the table above). However, for injuries lasting less than 6 months or so with a value of less than £2,000.00, these claims will be dealt with as Small Claims. This will mean only fixed costs of £80.00 can be recovered from the Defendant’s insurer which will mean it may be difficult to use a Solicitor to act for you in these claims.
Can I use a solicitor under the new system?
The new system still allows you to use a Solicitor to deal with your claim. However, because a Solicitor cannot claim costs from the Defendant’s insurance company (except for the £80.00 fixed costs) and because the compensation under the Tariff scheme is set so low that dividing it between the Claimant and Solicitor will not be fair to either of them, it is unlikely you will be able to find a Solicitor who will be able to act for you.
Why can’t a solicitor act for me under the new system?
It may seem that the solicitor cannot deal with these claims simply because there is not enough money. However, to deal properly, correctly and professionally with a claim for compensation simply cannot be done if the claim is run under the Small Claims Track with legal costs of £80.00 plus 25% of compensation of, say, £450.00i.e. £112.50 (for an injury lasting between 4 and 6 months). This amounts to total legal fees of £192.50. It is a requirement of being a solicitor that we must be regulated and insured and be professionally competent to deal with the claim. It is simply not possible to do this for these legal costs.
Do I have to deal with my claim on my own or can someone help me?
The Government has stated that Small Claims i.e. claims with a value up to £5,000.00 for road accident and claims with a value up to £2,000.00 for all other accidents, are simple and straightforward and so do not need the services of a Solicitor. The Government has stated that the Claimant themselves can deal with the claim against the Defendant’s insurance company.
The Government intends to design and build an on-line Portal (the Defendant’s insurance companies are helping the Government with this). This is intended to be user-friendly and accessible to everyone. It is not certain if all Claimants will be able or will want to use this Portal, but after April 2020 there will be no choice.
As said above, the majority of claims resulting from road accident and a significant number of cases resulting from other types of accidents will now be dealt as small claims. These claims will include relatively significant and complex injuries and losses and also will include cases with complex issues, for example liability disputes, Low Velocity Impact arguments, causation arguments. If you don’t feel confident or capable of dealing with these cases on your own, this is what you will have to do after April 2020.
It will be possible to ask a Claims Management Company to help you, but these companies are not regulated in terms of how they deal with a claim, there are no professional standards they have to reach, they do not need to be insured and there is no limit on what they can charge the Claimant for dealing with the claim. It is not likely a Claims Management Company will agree to deal with a claim for the fixed legal costs i.e. £80.00, and therefore a Claimant may have to pay a higher percentage of the compensation i.e. possibly above 50% of the compensation.
The reforms do not seem to have any benefit for Claimants – why have they been introduced?
The insurance companies originally said the reforms were needed to tackle fraud. Everybody agrees that all fraudulent claims need to be stamped out. However, the insurance companies did not provide reliable figures of the number of fraud cases to support this argument. The fact is that in 2017, only 0.22% of all motor claims were proven to be fraudulent. Furthermore, by removing Solicitors from the claims process and allowing Claims Management Companies an increased role, this is likely to encourage fraudulent claims. Therefore, instead of tackling fraud, the reforms are likely to increase fraud.
The insurance companies then argued the reforms were needed to tackle the “Compensation Culture” i.e. a culture where the number of claims is increasing and more and more people are encouraged by it to have a go and make a claim. However, the “Compensation Culture” has been proven to be a myth. The Government has released figures that show the number of claims has actually fallen in the last few years and fell a further 8% last year.
The insurance companies then argued that the reforms were needed to reduce insurance premiums. This is the argument that has been used to justify various other successful reforms to the claims sector over the last few years. The insurance companies have said that the reforms will mean a £35.00 reduction in every driver’s premium. However, while everyone would welcome a reduction in insurance premiums, on average the cost of premiums has risen year on year. The insurance companies have admitted that, while there may be a saving of £35.00 for each driver, nobody will see this saving because the cost of repairs, the cost of replacement car parts and other outside factors (including the value of the £) will mean that premiums will continue to rise even after the reforms are introduced.
The Government has now admitted that the reforms are needed for “political reasons”. This can only mean that the Government wants to “reward” the insurance industry for political donations or for supporting the government in other areas i.e. by insuring new properties that are built on flood-risk land.
However, this reward is at the expense of all innocent victims of accidents. The reforms will deny these victims access to justice, will deny them the compensation they deserve and will deny them the medical treatment they need. This is not fair or right, but the Government has not listened to these concerns or taken into account these effects and has introduced the reforms anyway.
Why are the reforms being introduced in April 2020?
The reforms were originally to be introduced in April 2019, but were put back so that the online portal could be built, developed and tested. There is no guarantee that the portal will be ready by April 2020 and so the reforms may be delayed again, but at the moment, the cut-off point is April 2020.
Is there a chance the reforms will not be brought in?
At the moment, the Civil Liability Bill is waiting for it’s Royal Assent which is the last stage in the process of making it law. Therefore, it seems the reforms will be brought in as planned in April 2020. However, these are uncertain times. There is likely to be a General Election before April 2020 and a different government may not go ahead with the reforms. There is also Brexit and nobody is certain what effects this will have on the matter.
There is also the matter of a previous case regarding employment tribunal fees. The case from 2017 is called R (Unison) –v- Lord Chancellor and it basically confirmed that court fees being set too high was not legal because it was an impediment to access to justice. The Civil Liability Bill, in a different way, is a similar impediment to access to justice because it essentially prevents genuine Claimants from using a solicitor. It is difficult to see how the Civil Liability Bill can justify impeding access to justice in light of the court’s decision in this case.
Therefore, it is possible the reforms may be abandoned between now and April 2020, but it is probable they will go ahead. At this time, though, it is impossible to be certain.
What is the online portal and how do I use it?
At this time it is unclear as to the format of the online Portal, but the intention is to design an easy-to-use, user-friendly system that is available to all. It is not clear what happens if a Claimant cannot use the system or has access to the internet or encounters a problem when using it. It is also not clear as to what assistance will be available to Claimants if the insurance company raises arguments about the claim. This should become clear in the next year or so.
I’ve had an accident – what should I do now?
If you’ve had an accident at this time or within the last three years, call Leech & Co on 0161 749 9000 for free, without obligation advice about it. If you are able to make a claim, we will make sure you receive the compensation for your injuries and losses that you deserve and that the process is as straightforward, hassle-free and quick as we can make it. We will guide and assist you every step of the way.
However, if you have an accident after April 2020, the situation will be very different. We will update this blog as the situation becomes clearer in terms of the reforms so check back from time-to-time.
If you would like to discuss the content of this article further, call us now on 0161 749 9000.