Friday, 25 October 2013

Whiplash reform: riding roughshod over the injured person?

Whiplash is in the news - in a good way, so far as the government and insurers are concerned. Wednesday saw the publication of the government's response to what some might say was a pejoratively entitled consultation: "Reducing the number and costs of whiplash claims". A number of reforms tailored to this apparently noble end are proposed. The result was a welter of media headlines which will have warmed the hearts of members of the Association of British Insurers.

Fleet Street seems to have swallowed the spin that says either that whiplash doesn't exist, or, if it does, that it is always exaggerated by an unholy alliance of unscrupulous personal injury lawyers and claimants on the make. Hence, then, the congratulatory flavour of yesterday's coverage, as editors chose to praise Justice Secretary Chris Grayling for bravely tackling the scourge of fraudulent whiplash claims, those which drive up the cost of insurance premiums, penalise honest drivers and contribute to the dread, if factually dubious, 'compensation culture'.

The devil is in the detail


Reducing the Number and Costs of Whiplash Claims: A Consultation on Arrangements Concerning Whiplash Injuries in England and WalesBut what, though, is the true impact of the reforms?

First up, the government says it wants "an improved, robust system for medical examinations and reporting which will ensure those who make unnecessary, exaggerated or fraudulent claims are deterred from doing so, and that the genuinely injured get the help they need." It therefore intends to introduce independent medical panels, to which claimants will have to submit before a claim can be made. This is sensible, in principle, but it has a flaw: a panel inevitably restricts choice. Better would surely be the creation of a register of accredited medical experts so that the injured person, like any other litigant, can choose his or her expert. There are other questions, too, such as who will control the panel, how its members are vetted, and what sort of appeal process will be set up. 'Independent', rather than funded and administered by the ABI, is key - and the devil is in the detail.

Time to consider ending pre-medical offers to settle


Pleasingly, the government says it will tackle a fundamental problem which has long gone under the radar: the practice conducted of settling cases without a medical report. However, there is a further and associated problem, where a representative of an insurer contacts a person who has been in an accident and offers them a cash settlement, 'to avoid the time, cost and hassle of going to solicitors'. The practice is inimical to justice - it means an injured person is being bought off, without the benefit of specialist legal advice - but it also contributes to the very vicious circle that the ABI and its members lament. Where someone is confronted by someone on the end of the phone offering money for a soft-tissue injury (which may be the extent of an individual’s injury), there will be people who will be only too tempted to pocket the money and run.

This, the practice of pre-medical offers to settle, is a very common insurer practice. Today, as you read this, an insurer will be seeking to buy off a claim before a lawyer ever sees it. During the consultation on whiplash it was notable that many MPs were wholly unaware of this egregious practice. Now that they are, they propose it must be stopped (see the All party parliamentary transport committee's recent report). The government's statement of intent is laudable but it must not be forgotten. We cannot allow a new culture to arise, whereby insurers add avoiding 'the time and hassle of having to get a medical report' into their armoury of tactics to see off claims.

The small claims court limit must not be raised


There is much to comment on in yesterday's announcement, but ultimately it all comes down to justice. Anyone who has ever suffered whiplash knows that it is real, and painful, and debilitating. Why should the insurance industry avoid paying for it, when an injured person suffers through no fault of his own? For avoidance seems to be the name of the game - hence the government's much more worrying statement of intent, that in due course the threshold for small claims court personal injury claims will rise from £1,000 to £5,000. The average whiplash claim sees damages of between £3,000 and £3,500. It is clear that raising the small claims court limit to £5,000 will have a major impact on whiplash claims. With legal costs being irrecoverable, they will, for the most part, be uneconomical. The net result will be that they will disappear.

This would be great news for the ABI, but it takes no heed of the person we should be worried about: the injured accident victim. Having just overhauled our civil justice system in the most radical and comprehensive way for more than a decade, there is no call to change the small claims court limit - and there is every reason to get the reforms proposed on Wednesday 100 per cent right.