Insurers have hit back following reports that the government is re-thinking plans to overhaul the personal injury market in motor insurance claims.
In last year’s Autumn Statement, Chancellor George Osborne said the government would consult on proposals to crack down on the “fraud and claims culture in motor insurance” by ending compensation for whiplash and other soft tissue injuries and raising the small claims threshold to £5,000. However, no consultation has been published.
Speculation was mounting this week that the plans have been dropped, fuelled by media reports and a press statement by the Association of British insurers (ABI) lamenting the fact the Ministry of Justice “appears to be rowing back” from reform.
The news delighted claimant solicitors. Vidisha Joshi, head of personal injury at Hodge Jones & Allen, said the move “offers a breather for those fighting for access to justice”. Neil Sugarman, president of the Association of Personal Injury Lawyers (Apil), said: “When news emerged in the summer that insurers had failed to pass on savings from previous personal injury reforms to motorists, it was clear that the proposed reforms were aiming at the wrong target.”
However, the Ministry of Justice (MoJ) declined to confirm the rumours. A spokesperson said: “The number and cost of whiplash claims remains too high, increasing premiums for ordinary motorists.
‘We remain committed to tackling this issue, and will set out our plans in due course.”
Calling on the MoJ to press ahead with the reforms, James Dalton, ABI director of general insurance policy, said: “If the MoJ delivers on its promises, millions of honest customers will be better off.
“If they cave in to the vested interests of the ambulance chasers and cold callers, those businesses will be laughing all the way to the bank at the expense of honest motorists.”
Ian Davies, partner at Kennedys, who advises insurers on low-value high-volume claims handling, struck a more cautious note: “The decision may ultimately be a wise move. Insurers have many challenges ahead of them in a post-Brexit world. The claimant market has undergone significant consolidation recently. A period of calm, and dare I even suggest an opportunity for both sides to work together to find a mutually acceptable solution to propose to the government, may benefit all sides.”
