Transport CommitteeWritten evidence from True Personal Injury Solicitors (WL 59)

It seems from the attached Daily Mail article that the Justice Secretary has pre-empted the findings of Whiplash Consultation and the Transport Select Committee investigation in whiplash claims and will press ahead with increasing the Small Claims limit from £1,000 to £5,000 come what may. It therefore begs the question, “Why did the government consult on raising the Small Claims limit when it had already decided to do exactly that?”

What is worrying is that the government has swallowed hook, line and sinker the insurance companies assurance that they will pass on any savings and reduce insurance premiums. If this was going to happen insurance companies would have already passed on the enormous savings they are already making by reducing the cost of legal expenses insurance. The government introduced Qualified One Way Costs Shifting (QOCS) to reduce the cost liability to the claimant if a case was lost and thereby remove or reduce the need for After the Event (ATE) legal expenses insurance. The result is that ATE insurance is now only required to protect a claimant from failure to beat a Part 36 offer and, as a consequence, the premiums for these polices have dropped from between £300 to £400 to between £75 to £150 (a drop of least 60%).

Last week I obtained motor insurance quotes from Direct Line, Aviva and Esure and the quotes included legal expenses insurance that was priced at between £26 and £27, which is the same as I was quoted a year ago. Given that Before the Event (BTE) and ATE legal expenses insurance insure the same thing, please can you tell me why BTE legal expense insurance premiums have not reduced?

It is clear that insurance companies are already reneging on their promise to pass on any savings and are, at the same time, selling motor legal expenses insurance that, given the introduction of QOCS, is possibly not needed.

May 2013

Prepared 29th July 2013