Can Osborne Cure Whiplash?

Can Osborne Cure Whiplash?

Law to be changed to reduce insurer pay-outs, how will this affect you?

Law to be changed to reduce insurer pay-outs, how will this affect you?

It gives you some idea of the gap between the rhetoric and reality to know that according to evidence given by the insurance industry to the Transport Select Committee in 2011, around half of whiplash claims were faked in some way. At that time around 600,000 whiplash claims per year were being made. By my maths that means some 300,000 fraudulent claims per year are apparently being made – but the Insurance Fraud Bureau, who investigate these things, arrest on average only 125 alleged insurance fraudsters per year.

Anyone would think motor insurers have been exaggerating the figures in order to get the law changed so they don’t have to pay out so much to accident victims.

Certainly this person does. On Radio 4’s You and Yours on 29 May 2014, a listener emailed in:

“This one comes from a listener who used to work for an insurance company, she says, ‘[The IFB spokesman] says the rise in fraudulent claims may not always be due to an actual increase in people cheating the system. I was threatened with losing my job if I didn’t make more ‘red alerts’. Workers in these call centres are under extreme internal pressure to report as many claims as fraudulent as possible.’”

Nevertheless, George Osborne in his Autumn Statement announced that the law is to be changed so that insurance companies don’t have to pay out so much to accident victims.

The announcement stated that it aimed to:

“reduce the excessive costs arising from unnecessary whiplash claims” by removing the right to compensation for “minor soft tissue injuries”, and by transferring claims for personal injuries up to £5,000 to the Small Claims Court.

There is a certain amount to unpick, and the detail will be fleshed out in the coming months.

However, it is notable that the statement refers not just to whiplash, but to all soft tissue injuries – so the law could potentially refer to injuries such as twisted ankles, twisted knees, facial scarring, the list could go on!

Very often injuries such as ligament or cartilage damage can produce symptoms equal to or worse than fractures. Can it be fair that someone with a broken bone can claim compensation, whereas someone else with identical symptoms but no fracture cannot?

The transfer of more claims to the Small Claims Court is also significant. The Small Claims Court is supposed to be a less formal setting for smaller disputes to be aired without solicitors, and so the winning party cannot claim back their legal fees. The Small Claims Court limit used to be £1,000 for injury claims, a sudden move to £5,000 will mean huge numbers of accident victims left either to take their cases to court themselves – against the insurers’ lawyers – or to pay for their solicitors themselves.

Whiplash victims will still be able to claim for financial losses, such as loss of earnings and treatment costs which tend to be the most important concerns, so all is not lost.

However, there is a further sting in the tail in all of this. If you have a whiplash (or other soft tissue injury), you can no longer claim compensation for the injury, on the face of it, your claim for loss of earnings is no longer a personal injury claim at all, but a pure money claim. This would mean the new £5,000 Small Claims Court limit doesn’t apply, and claims up to £10,000 would now have to go to the Small Claims Court.

So imagine now that you have had an accident and spent several months off work (which doesn’t sound too ‘minor’ to me), and lost, say, £8,000 in pay as a result. Which do you fancy: going to court yourself and arguing with the insurance company’s barrister and hoping to get a good result, or losing a chunk of that £8,000 in having to pay your own legal fees? Bear in mind this isn’t a loss you brought upon yourself, someone broke the law and injured you. It doesn’t sound too fair to me.

Of course there are a lot of claims for road accidents made these days (although ironically, largely due to the behaviour of insurers), so you might think that a bit of ‘rough justice’ is a small price to pay for curbing the excesses of the ‘compensation culture’. However, the observant among you may have noticed that the announcement from the Chancellor appears to make no direct reference to road accident claims. Apparently, these changes are coming to all sorts of claims, even those like accidents at work where the numbers of claims have remained virtually unchanged for 20 years.

It is likely the change to the small claims limit will come in around the spring of 2016. If you have a claim you have been thinking about bringing, it is probably best to do it now, so that if necessary it can be put in before the law changes so you can recover the current level of legal costs alongside your damages. Any change affecting what damages can be claimed is likely to come in 2017.

Hunt & Coombs has never been one of these ‘ambulance chasing’ firms that lives on small whiplash claims. Those firms are now in a difficult position. Our emphasis has always been much more on securing not just compensation, but also treatment to help recover from the physical and financial effects of an accident. The diversity of our work means we remain confident that we can continue to support accident victims with claims of all sizes, and to provide the necessary ‘helping hand’ in difficult times.

As the details to these law reforms are worked out, we will be able to give details on how we can continue to help injured people make the maximum recovery possible.

For more information on Personal Injury Claims please contact a member of our Personal Injury Department who will be able to assist you further.

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This article has been prepared for general interest and information purposes only; it does not constitute legal advice and should not be relied on as such. While all possible care has been taken in the preparation of this article, no responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the firm or the authors.