Conclusions and recommendations
Whiplash
1. Where
someone can demonstrate that they have suffered an injury, including
whiplash, as a result of a road traffic accident for which they
were not fully liable they should be able to claim and receive
compensation. However, in relation to whiplash, we are not convinced
that a diagnosis unsupported by any further evidence of injury
or personal inconvenience arising from the injury should be sufficient
for a claim to be settled. In our view, the bar to receiving compensation
in whiplash cases should be raised. If this were possible by means
of an insurer taking a case to court and establishing new case
law we suspect this would already have happened. We note the Government's
argument that its legal reforms should reduce the money in the
system and encourage insurers to defend claims more vigorously.
If the number of whiplash claims does not fall significantly once
these changes are implemented there would in our view be a strong
case to consider primary legislation to require objective evidence
of a whiplash injury, or of the injury having a significant effect
on the claimant's life, before compensation was paid. (Paragraph
8)
Referral fees
2. Although
we welcome the Legal Services Board's new guidance on the transparency
of referral fees, it does not go far enough. Firstly, it relates
to fees paid by solicitors but leaves untouched the fees paid
by others involved with motor insurance claims, such as garages
and credit hire firms. Secondly, we are disappointed that the
Government has not given a stronger signal that more transparency
is necessary. We recommend that this is done, for example by Ministers
setting out the information they think insurers should provide
to consumers and drawing attention to examples of good practice.
Thirdly, we are disappointed that the insurers, who have complained
about the dysfunctionality of the current system, have not done
more to improve it. Our recommendation about transparency was
met with silence from the insurers, which perhaps tells its own
story (Paragraph 12)
3. Despite these doubts,
we note the swift action taken by the Government to tackle this
issue and make two recommendations. Firstly, once the Bill is
enacted, we call on the Government to prioritise the implementation
of what was new clause 20 in the Commons, Regulation by the
FSA, which could prohibit insurers from receiving referral
fees across the board rather than only in relation to legal action.
(Paragraph 17)
4. Secondly, one way
to help reduce premiums may be to consider whether the legal costs
of low value claims processed using the pre-action protocol and
online portal are reasonable. We recommend that the Government
review how the protocol and portal have operated since they were
introduced last year, looking in particular at how the fixed costs
associated with the protocol relate to the actual cost of the
work involved and whether use of the protocol acts as an incentive
for insurers to concede claims which ought to be defended. This
review should be conducted and its results published within six
months. (Paragraph 18)
5. We recommend that
the Government send a clear message to the insurance industry
that it expects the data protection legislation to be fully respected
and we echo the recommendation of the Justice Committee that the
stricter penalties for breaching the Act, passed by Parliament
in 2008, should be brought into force. (Paragraph 21)
6. We also call on
the Government to initiate an investigation of cold calling intended
to generate personal injury claims, with a view to examining the
legal and regulatory options for curtailing this activity. (Paragraph
22)
Fraud
7. We
recommend that the Government provide us with updated information
on the timetable for its project to enable insurance firms to
gain access in real-time to the DVLA database. (Paragraph 25)
Uninsured driving
8. We
recommend that the Government keep us informed of its review of
the penalties associated with motoring without insurance. (Paragraph
26)
Conclusion
9. We
recommend that the Government provide us with a written response
to the House's resolution [on the cost of motor insurance] setting
out how it will be implemented. (Paragraph 29)
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