Insurers have opened a new front in the battle to secure further radical reform of the personal injury sector. The Association of British Insurers today unveiled a 10-point plan for reducing motor premiums, which have rocketed to unprecedented highs in the last two years.
Among the proposals are new caps on damages for injuries beyond whiplash, which is already subject to a tariff. Insurers want a similar system for bodily injuries such as bruised knees and sprained ankles, where the level of compensation would be pre-determined and based on how long injuries last.
In a document entitled ‘roadmap to tackle insurance costs’, the ABI said it had successfully campaigned for whiplash reform but this had prompted new tactics from personal injury lawyers.
‘Many claimants are now encouraged to claim for additional injuries that the claimant legal sector argue should attract significantly higher damages amounts than the tariffs that have been set for whiplash,’ said the ABI. ‘Reform principles enacted for whiplash should be applied to similar injuries to keep costs under control. Increasing the cap at which higher legal fees are incurred to account for inflation would also help control the total cost of settling such claims.’
The ABI pledged to work with government, regulators and the courts to reflect these views. Although the Ministry of Justice has shown no indication it would extend personal injury tariffs beyond whiplash, policy changes in the last 12 years have often reflected the lobbying efforts of insurers and the prospect of reducing the cost of car insurance would be certain to interest ministers, particularly in an election year.
The Civil Liability Act 2018 brought in tariffs for whiplash injuries and a new portal for handling low-level claims, and has resulted in significant falls in the number of claims being made. But there remains uncertainty about how to deal with so-called mixed claims, where the victims suffers a whiplash injury and a separate, non-tariff, injury. The way to compensate these claims is currently the subject of a Supreme Court case where a ruling is expected later this year.
Matthew Maxwell Scott, executive director of the claimant-facing Association of Consumer Support Organisations, said it was ‘premature to be hatching more plans’ when so many issues were still not resolved from the whiplash reforms.
‘We must first await both the Supreme Court’s judgment on the Rabot mixed-injury appeal but also see what savings the reforms to date have delivered, something the FCA’s report due later this year should reveal,’ he added.
The ABI also suggested the government ‘reduce the impact’ of the personal injury discount rate, which calculates whether to make deductions based on the potential investments claimants can make on large compensation sums. The rate is currently -0.25% in England and Wales, which effectively means there is not deemed to be any prospect of a lump sum generating any returns.
The insurance body added: ‘We think the rates in the UK should be re-evaluated to better reflect the real returns accumulated by low-risk investors of lump sums and have been working to feed into calls for evidence which will inform a decision this year.’
The Association of Personal Injury Lawyers today accused insurers of ‘demonising’ victims to cover for their own business practices. Chief executive Mike Benner added: ‘If the insurance industry does not pay the full and fair compensation for which their customers are accountable, people with catastrophic injuries will have to turn to the state to fund their needs and their care or go without.’
