Sitting on a long train from Birmingham to Euston – and having to navigate all 17 stops between meant I had the time to look at the Government’s recent proposals for Personal injury reforms announced in recent times, and briefly yesterday by Philip Hammond at the despatch box along with the Autumn statement.
I’m heading on my way to a meeting to discuss the very document with my colleagues from MASS. I know a number of stakeholders are also discussing these matters, and the very limited time to respond, particularly with the Christmas break looming, means that there’s much work and consideration to be done.
Here’s my thoughts, just on the foreword. Please excuse grammar and spelling, this was typed with a sense of growing bewilderment at the apparent u-turn from just a few short weeks ago when other matters – such as Brexit and rioting Prisoners seemed to be a little higher up the MOJ agenda. I digress, here’s the document as I typed it:
My comments on the foreword to the MOJ consultation document (Reforming the Soft Tissue Injury (“whiplash”) Claims Process – November 2016.
The document tells us that there is a ’Culture… fuelled by cold calls’ – well they’re not coming from Solicitors, as it’s illegal for cold calling by the profession, and the Government could easily tackle that by extending the ban to CMCs, or anyone for that matter. Why isn’t that being done? Pension cold calling has banned. Solicitors – particularly MASS – have been calling for the cold calling ban for an age. The criticism seems to be aimed at the legal profession which of course is entirely misguided.
Claims are also said to be ’fuelled by targeted advertising’ I’m very happy, as most lawyers are for a ban then, or to regulate advertising more closely. The profession largely doesn’t want a dumbing down of it’s activities . The PI adverts are most likely more irritating to lawyers than they are to the general public in any event. Better restriction / policing / rules would address this satisfactorily.
I could not help but guffaw at the phrase that ’Leading insurers have promised to pass on savings’- empirical evidence shows that’s precisely what does NOT happen, and certainly hasn’t happened. LASPO, Portal, Medco, ASKCuePI have all massively changed the face of PI as we know it, yet no savings have been passed on, in fact, some insurers have boasted record profits in most recent times, and the savings by the industry / profession changes have seen £2bn directly to insurers. This has largely been funded by massive savings in fixed costs – to the detriment of the solicitor, not the public, and certainly not to the insurer.
“The number of whiplash claims is 50% higher than 10 years ago. Factoring in the increase in CMCs and deregulation is that any wonder? Solicitors didn’t want this, and actively campaigned against it. The bigger news is that claims have fallen, year on year for the last 3 years, and this data is exact – and it’s from the Government – the DWP to be right on point The concern I have too is that these proposals don’t just stop at ‘whiplash’ claims. They target all claims with the proposed small claims rise. How on earth does that equate to those injured at work? Why all claims?
“There’s simply to great a financial incentive to make claims” – Is this suggesting that the general public are largely fraudulent then? How on earth does that tie in with falling claims, the checking of fraud through ASKCuePI and randomised medical reporting through MedCo? Far from being an ‘incentive’ – Solicitors are now receiving costs that are sashed to the bone through the implementation of fixed costs, and numerous Solicitors firms have now actively stopped dealing with Personal Injury claims because of the complex handling with poor costs. So, with a broad brush, the seemingly largely fraudulent general public who are apparently taking opportunistic claims in road traffic accidents are now caught if the accident occurs at work, on the highway, or in any instance. It’s very easy to produce throw away comments about fraud. The Insurance Fraud Task force has worked hard at this with the profession, and good progress and change made. However, fraud in Personal injury claims is miniscule – 0.2%, so why all the hysteria?
‘Compensation Culture’ is mentioned again, without any appreciation of the DWP evidence of falling claims, or the complex background of numerous changes that have all played directly into profiting insurers. No mention at all is made of the changes that are still bedding in – and curiously nothing mentioned about the fact that insurance premiums have risen, with none of the £2bn+ savings passed on from insurers to their policy holders. Insurance is not a luxury, it’s a legal obligation, so the general public are the captive audience here.
‘Driving down the number and costs of bringing civil claims – in particular personal injury claims -has been a priority for this government and its predecessor since 2010.’ Some real explaination needs to be given then here please as claims have fallen – and the evidence from the Government’s own department proves that. Solicitors costs have plummeted with fixed costs – yet the Government has increased court fees in substantial cases by 600% whilst closing local courts and continually criticising the lawyers who are now earning substantially less in fees by radical changes. Insurers now no longer pay for the cost of ATE insurance and success fees, pay slashed fixed costs and despite making massive savings have pocketed them, passing on nothing to the motorist / general public – ironically they’ve increased premiums at a time when the Government are about to take away the right of the general public, the real loser to claim fair compensation by replacing damages with a much reduced set of proposed figures – and for the vast majority of claims bar access to law by removing the recoverability of fees. The Government has also increased IPT yet again to 12%, actively adding to the costs, not providing any saving.
So who wins? Insurers – they do so in spades. Who loses? Forget Solicitors for a minute – they’ve been losing for some years through the numerous changes to the system. The real loser here is the general public, and they’re sleepwalking into these appalling changes on the false premise that they’re apparently gaining an extra £40 a year. Even if they were to obtain the cost of around 11 sandwiches a year, it is sadly a massive price they’re about to pay.
Article Written by Paul Nicholls, Nicholls Brimble Solicitors 24 November 2016.