The small claims limit for whiplash claims will rise to £5,000, under reforms set out in the Prison and Courts Bill.
The Bill, published last week, sets a lower than expected small claims threshold for personal injury (PI) claims other than whiplash. It will rise from £1,000 to £2,000—substantially less than previously mooted thresholds of £5,000, £7,500 and £10,000 in the consultation.
However, the Bill raises the limit for whiplash claims to £5,000 and bans settlement of claims without medical evidence.
Fixed tariffs will be introduced to cap compensation rates for pain, suffering and loss of amenity where injuries last less than two years. Judges will have discretion to decrease amounts awarded under the tariff where there is contributory negligence or increase it by up to 20% in exceptional circumstances.
The Ministry of Justice claimed the reforms would cut care insurance premiums by about £40 per year and help “crack down on the compensation culture epidemic”.
However, Vidisha Joshi, managing partner and head of PI at Hodge Jones & Allen said: “The legitimate injury of whiplash is being use by the insurance industry for their own advantage.
“They claim insurance premiums will fall as a result of a fixed tariff—we know from past experience premiums do not fall. It will once again be individuals in our society who pay the price, with the growing profits going straight to shareholders.”
Lawyers also expressed surprise at the speed of the reforms, which were set out in the November 2016 consultation, Reforming the soft tissue injury (‘whiplash’) claims process. Qamar Anwar, managing director of First4Lawyers, accused the government of “rushing through” its reforms.
“It is clear that the consultation—which only closed on 6 January-simply paid lip service to a decision that was already made by the government in cahoots with the insurers behind closed doors.”
Meanwhile, solicitor Kerry Underwood warned the reforms were “politically very clever” but could leave judges picking up the pieces.
“District judges are likely to find the courts clogged with contested allocation hearings, with the claimant arguing that the matter is not a soft tissue injury and therefore should be allocated to the fast-track and the defendant saying that it is a soft tissue injury and should be allocated to the small claims track,” he said.
According to Underwood, whiplash claims make up about 50% of PI cases.
However, James Dalton, director of general insurance policy, Association of British Insurers, said: “The reforms to whiplash claims set out in the Bill cannot come soon enough.
“For far too long claimant lawyers have been defending a system riddled with exaggerated and fraudulent claims because they have been profiting handsomely from it. The gravy train must stop.
“People want an insurance claims system that provides compensation and support to those who genuinely need it. What they don't want is to be plagued by spam calls and texts from ambulance chasers, whilst personal injury lawyers continue to profit from a broken system in urgent need of reform.”
