The Association of British Insurers (ABI) has conceded to MPs that the insurance industry saved ‘hundreds of millions of pounds’ from reforms to personal injury in 2013 and that whiplash claims have come down in the last year.
President of the Law Society of England and Wales, Robert Bourns, has welcomed comments made by ABI director James Dalton to the Commons Justice Select Committee during a session on personal injury reform, including an acknowledgment that a five-fold increase in the small claims limit to £5,000 should, for now, only be implemented for road traffic accident claims.
Robert Bourns said: "Not everyone drives a car, but under the government's 'whiplash' proposals everyone would suffer because all personal injury claims worth £5,000 and under will be processed under the small claims track - a system that was designed to handle low value disputes such as faulty goods or small unpaid invoices.
"Ordinary people who have suffered minor soft tissue injury, including injuries sustained in non-motor accidents, need expert legal help to navigate the court system and understand medical evidence.
"A five-fold increase in the small claims limit would prevent claimants from recovering legal costs, which means that many would not be able to obtain legal representation for claims, forcing people to fight through the courts without legal help."
Robert Bourns added: "The ABI's admission undermines the supposed reason for this reform, the result of which will be to remove access for a large number of people suffering loss, but otherwise on modest incomes. Rather than trying to abolish or reduce compensation for genuine claimants, the government should end the activities of cold callers.
"We have always said that spinning the proposed small claims increase as an attack on the 'compensation culture' and claiming it will reduce premiums is misleading.
"The Justice Select Committee yesterday expressed scepticism about the extent of fraud, and the prospects of insurance premiums being reduced. Answering questions during the session, even the ABI could not provide assurance this would happen.
"Mr Dalton's admission that the insurance industry had saved ‘hundreds of millions of pounds’ from the reduction in fixed fees and that whiplash claims have come down in the last year underlines research by consumer organisation Which? that last year found the insurance industry had failed to perform against a promise to reduce premiums after the government brought in reforms to reduce whiplash claims. Mr. Dalton also admitted the concern over the faith in medical reports has eased since the introduction of the MedCo scheme."
Notes to editors
The government is currently proposing to raise the small claims limit for personal injury claims from £1,000 to £5,000 and to stop or radically reduce compensation payments for minor soft tissue injuries, including whiplash.
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