Personal injury reforms: what are they and what do they mean for you?

Since 2015, the Government has been working on proposals to make changes to the personal injury sector, in a bid to crack down on insurance fraud and reduce insurance premiums.

The Government is hoping to do this by:

• Removing the right to make a personal injury claim for ‘minor’ whiplash injuries valued under £5000.
• Transferring all other personal injury claims up to £2,000 to the small claims court.

There had been little progress with the issue in 2017 – it was put on hold when the General Election was announced – but in January 2018, a Justice Select Committee heard evidence from key spokespeople, which shows the PI reforms are back on the agenda once more.

At Browell Smith & Co Solicitors, we believe the reforms are making huge changes to tackle a tiny problem. It has been likened to cracking a walnut with a sledgehammer.

Here is our guide to the proposed personal injury reforms:

Why should you care?

As with many legal services, this might not be something that you think about until you need it, but it’s important to understand what’s going in and how it could affect you or your family, in the event that you are injured in an accident.

As a society, we should be ensuring that people have access to justice, and are able to be represented in a court, regardless of their financial circumstances and most appropriately that there should be equality of advice and support. The question to be asked is do you believe that it is right that an Insurer will be able to call upon a whole team of lawyers and professionals to prevent you succeeding in a claim if you are without the resource to instruct a lawyer of your own choice to act on your behalf?

What is whiplash?

Whiplash is a relatively common injury that is caused when the head and neck are exposed to sudden, violent movement, usually forwards/backwards. It places strain on the muscles and tendons in your neck. One of the most common causes is motor vehicle crashes.

Whiplash can lead to very painful, debilitating symptoms. Anybody who has ever suffered prolonged neck pain or strains will be able to confirm how difficult life can be.

Why is the Government making these changes?

The Government says the aim of the PI reforms is to reduce insurance premiums. Average insurance premiums are now well over £700, which is too expensive for many people, and is a significant addition to the ever-increasing cost of living in 2018.

The Government says that fraudulent whiplash claims add £2bn to the cost of insurance – the equivalent of £90 per policy. However, these figures are out of date. They are from 2008, so are a decade old, and the number of whiplash claims have fallen, year-on-year. The actual number now is significantly lower.

Are there any other ways to reduce insurance premiums?

One of the biggest increases in insurance costs in recent years is due to rising Insurance Premium Tax (IPT). When IPT was introduced in 1994, it was set at 2.5 per cent. It rose to 6 per cent by 2015 – but since then has shot up to an all-time high of 12 per cent, as of June 2017.

On a £758 policy (the 2017 national average), each policy holder is paying £81 in tax. If the IPT rate was still at 2.5 per cent, as it was when it was introduced, then the average policy holder would be paying £17 in tax, saving £64 on each policy.

So it’s important to understand that fraudulent whiplash claims are not to blame for the high insurance policies we’re seeing in 2018.

Insurance fraud is much lower than you’d think

Government figures acquired by the Association of Personal Injury Lawyers (APIL) showed that there was proven insurance fraud in less than 0.25 per cent of cases. Of those, only a smaller fraction were fraudulent personal injury claims, and an even smaller fraction were whiplash claims.

The idea that every single car accident results in a whiplash claim is false; the idea that whiplash is in any way a made-up injury is also false. We need to move away from both of these ideas.

What do the changes mean for me?

If the changes go ahead as planned, then any claim up to £5,000, for whiplash or £2000 for personal injury, would be referred to the small claims court. In practice, this means that you could either represent yourself, instead of being able to rely on qualified legal representation, or pay for a lawyer. In the small claims court, you cannot reclaim your costs, so you would have to carry this burden yourself.

Personal injury claims, even low-value claims, are incredibly complex in nature and are very difficult to proceed. A significant percentage of all personal injury claims are valued at less than £5,000 and the vast majority of whiplash claims. The proposed changes will leave people with some very difficult choices: the most likely outcome is that injured people will be forced to abandon their claim and will forego rights to compensation that has been a part of UK law since Anglo-Saxon times.

What next?

There is much lobbying still taking place on both sides. Cynics have suggested that the insurance industry is too powerful, and has a lot of friends in the Government, which means these proposals are likely to go through to some extent, but not if we all protest now. For now, we must wait to find out what’s going to happen next, but we can expect more developments in 2018.

Remember that if you are not interested in preserving the rights that you currently have, then others with vested interests are just as interested in taking those rights away from you.