Last month, George Osborne announced in the government’s spending review that he intends to raise the small claims limit for personal injury cases from £1,000 to £5,000.
This will deny thousands of victims, injured through someone else’s negligence, the right to claim the cost of legal help to recover compensation. Claimants will be left at the mercy of the insurance industry, whose aim is to keep compensation payments to a minimum and increase profits for the benefit of its shareholders.
They will either have to simply accept what the insurers offer them (we regularly recover over 100% more than the insurer’s first direct offer) or instead represent themselves in Court and fight the insurer and their legal team for fair compensation.
It is estimated that around 95% of personal injury claims would fall below the newly proposed £5,000 threshold, preventing a massive majority of injured claimants from accessing legal representation for these cases.
Crackdown on motor-insurance fraud
George Osborne has declared that his proposal will crackdown on motor-insurance fraud, reducing costs to the insurance industry, meaning savings are passed onto the consumer.
However, if the Government wants to eradicate fraud, it should first:
- Ban insurers from their common practice of making settlement offers before medical evidence is produced as this consistently shows anyone involved in an accident that they can recover compensation without proving that they have been injured.
- Ban cold calling by insurers. Motor insurers are notified of accidents and the parties involved very soon after the accident occurs. Insurers then contact parties to try and encourage them to accept a low offer or to make a claim through their own panel solicitors. Most instances of people being harassed about making a claim stem from the insurers themselves – how would independent solicitors obtain such details?
Furthermore, the latest reforms will in no way prevent fraudulent claimants from pursuing a claim. Those willing to take such action will not be put off from either making a claim directly to the insurance company or using one of the many claims companies that will be set up to take on low value claims in return for a fixed percentage of the compensation (much like the current PPI claims companies).
George Osbourne has also stated that the small claims increase will reduce motor insurance premiums. However, a raft of anti-claimant reforms was introduced in April 2013 with the same promise. The fact that insurance premiums have continued to increase should be an indictment on the insurers and their drive to constantly increase profits, rather than grounds for further restricting access to justice for injured claimants.
The Government’s desire to reduce motor insurance premiums is contradicted by its recent decision to increase the rate of insurance premium tax by over 50% with effect from November 2015.
The Government has failed to consider how these latest reforms will in fact result in huge losses to the state. By its own admission “it is predicted that in 2017/18, the reform would cost the Exchequer £35m in lost insurance premium tax (IPT), rising to £45m in 2018/19 and £55m the following year”. Furthermore, the reduction in successful injury claims will reduce by millions of pounds the amount recovered back from the negligent parties’ insurers for NHS charges (for treatment provided to injured claimants) and benefits (paid by DWP to injured claimants).
Injured claimants not represented in discussions
These latest reforms and those of 2013 are the result of numerous meetings at Downing Street to which only representatives from the insurance sector have been invited. The Government has rejected calls by claimant lawyers for such meetings to be attended by representatives on both sides and there appears to be very little logic behind such further reforms, which will bring no benefit to either the public or the Treasury.
Therefore, if next year you suffer a fractured ankle due to someone else’s negligence and take a year to recover with months off or work, there is a very significant risk that you will either have to accept the insurer’s offer of compensation or take the insurer to Court yourself to recover compensation.
We will still be here to help you and fight your corner but the insurer for the negligent defendant will no longer have to pay your legal costs – they will have to be capped and deducted from your compensation and, wherever possible, we will ensure that you recover maximum damages to compensate you fairly for your suffering and losses.