Cost of motor insurance: whiplash: Further Government Response to the Committee's Fourth Report of Session 2013-14 - Transport Committee Contents

Government response

Annex A
Transport Committee Request
Government Position
3. Government should provide a breakdown of claims for non-whiplash injuries since 2008-09 and explain trend for increasing number of claims of this sort, as whiplash claims decrease (Annex D, para 2). The number of road traffic accident personal injury claims is static, but the proportion of claims described by DWP CRU as whiplash has fallen (currently 58%). This figure is also different from that quoted by the insurance industry (78%) in evidence to the committee.

However, a deeper look at the Government figures shows that although the proportion of claims labelled as 'whiplash' is falling, at the same time the number of claims covering similar injuries to the neck have increased. Put together the actual rate of personal injury claims from RTAs to the neck area (including whiplash) is 87%.

A detailed breakdown of these and of claims relating to Post Traumatic Stress Disorders are attached at Annex B

4. Whether you wish to mandate for general use the standard medical report form already used for portal claims or a new form; and if a new form is necessary, why that is so (Annex D, para 9). It is our intention to agree a new reporting system with stakeholders in which only medical reports by accredited examiners will be acceptable as evidence in whiplash claims. Such a system will require an improved standard medical report form for use in all claims. The views of claimants, defendants, medical experts and the judiciary will all be considered when designing this form.

The aim is to develop a specific, standardised report form to ensure information provided is comprehensive, useful and specific, but that it is also simplified as far as possible. We also favour reports being made equally available to claimants, insurers and (where necessary) courts.

It is important that the report not only accurately assesses the claimant's injuries and provides a useful prognosis period the information included should also help all parties reach an effective and appropriate settlement relating to the quantum of damages.

5. Government should consult on ways of requiring whiplash claimants to provide more information in support of a claim, such as proof they saw medical practitioner shortly after an accident or evidence of the impact of the injury (Annex D, para 12) There is no immediate priority to consult further on this recommendation. As stated in the response document the Government is attracted to idea of a rule to ensure that medical examination and report is completed before claim can proceed (to provide greater certainty on costs and assessment of necessary treatment/compensation; and to stop pre-medical offers to settle). Such a rule would address the greater part of this recommendation. However, care should be taken when considering whether further evidence should be required. It would be very difficult to devise a system of evidence to use in this way which doesn't impact on the burden of proof used in such cases. The requirement for 'proof of a medical examination' should be usefully dealt with by the work we will be taking forward on stopping pre medical offers.
6. Government should analyse impact of the electronic portal on claims management and costs before reconsidering whether to increase threshold for whiplash claims to be dealt with using small claims track; and consider ways in which small claims track could be combined with routine submission of expert evidence (Annex D, paras 16 and 17). The Government's immediate priority is on the effective implementation of the measures announced on 23 October. We do believe there is a strong case for increasing the small claims track for personal injury claims, but when we return to this topic we will seek to ensure that adequate safeguards are developed to protect genuine claimants from any detrimental effects (access to justice; under-settling of claims) arising from any increase.

MOJ officials and analysts are in regular contact with representatives from Claims Portal Ltd in order to ensure sufficient capability is built into the 'Portal' to mitigate against any impact arising from a future increase to the small claims track.

7. MoJ should give its view on issues involved in limiting the right to compensation where it can be shown that a claim is grossly exaggerated (Annex D, para 19). The Select Committee referred to the approach taken by the courts in relation to claims which contain a genuine element but which are grossly exaggerated, and asked for the Ministry of Justice's views on the issues involved. The courts' approach reflects long-established legal principles which have implications across the spectrum of tort law. The Government understands that the issue has been raised with the Law Commission for possible consideration as part of its forthcoming 121 programme of law reform. The Commission will be discussing proposals for its programme with the Ministry of Justice shortly, and we will consider further whether to support its consideration of this issue.
8. Government should explain how it will monitor whether or not insurers will honour their commitment to ensure that any cost reductions resulting from proposed legal reforms are passed through to consumers in form of lower premiums (Annex D, para 24). This is an area we need to do further work on to ensure we have an adequate baseline of effective data with which to work. The Government will continue to monitor the publically available sources of data- such as regular reports on motor insurance premiums published by the AA and Other financial performance reports and profits data, details of any refunds from the MIB levy etc will also be considered and we will also continue challenge the industry for the evidence of savings being passed on to consumers on a regular basis.

However it is important to note that the level and timing of any reduction in the cost of motor insurance premiums is a matter for the insurance industry itself. The Government's earlier reforms to civil litigation costs and funding will result in unnecessary and excessive costs being removed from the system. These new reforms will strengthen the way medical evidence is assessed which will benefit the genuinely injured and deter those making speculative or fraudulent claims. We believe both sets of reforms to result in savings to the insurance industry and expect insurers to continue to pass on the savings made to consumers through lower premiums without delay.

9. Government should take a more strategic approach to tackling the cost of motor premiums, bringing together action by the MoJ, DoH and DfT as well as implementation of any future Competition Commission recommendations (Annex D, para 25) An informal cross departmental working group already exists. Officials from the Ministry of Justice, Department for Transport and HM Treasury meet on an ad-hoc basis to discuss issues relating to the cost of motor insurance. Recent meetings have also included representatives from the Department of Health and NHS England. Going forward the meeting schedule of this group will be formalised to ensure it meets three times a year. In addition the group will also produce an annual update report to Ministers highlighting any areas of concern and recommendations for further Government action.
10. How will DfT and the police improve information sharing about accidents so that highways authorities better target spending on improving road safety (Command Paper, para 49)? The Department for Transport has been fully engaged with Roger Carter's work seeking access to insurance data. Officials from both the Department and the Highways Agency are members of a working group looking at this issue, and we look forward to having access to the use of insurance claims data. We are actively seeking further support and co-operation from the industry as this is essential for information sharing in this area to be fully effective.
11. Does the Government agree that medical practitioners compiling reports on whiplash injuries should have access to details about the accident and the claimant's medical record (Annex D, para 8)? This recommendation aligns with the majority view of stakeholders from the consultation responses. It also supports the view received from the ABI, MASS, FOIL and AMRO in their consensus paper on medical evidence. It is therefore the Governments intention to work with stakeholders from all sectors as well as with the judiciary to ensure the newly developed process is suitable for all and helps experts to achieve improved diagnosis, prognosis and report writing. We will ensure that the new system has the facility built in for experts to receive extra information such as accident reports from the defendant and the claimant's medical records where this is appropriate. However, there is a financial implication to the cost of any report which utilises such information and this also needs to be considered when a report is commissioned.
12. Does the Government agree that there may be scope for regulatory bodies such as the GMC to have a role in auditing reports relating to whiplash claims and handling complaints (Annex D, para 10)? The Government wishes to develop an accreditation scheme that is effective for all, and which results in good practice techniques being utilised in a consistent manner by all medical experts engaged in producing medical reports. For this to happen there must be an effective auditing and sanctioning facility attached to the final scheme implemented. The Government does not intend to enforce an entirely new scheme if there are effective existing industry schemes or bodies which can be used to provide the required results. This means we will look at current smaller scale accreditation models and will also discuss with the existing regulators- such as the GMC- how they can help support the Government to achieve its objectives.
13. What action will the Government take to establish collaborative arrangements between insurers and solicitors aimed at identifying and deterring potentially fraudulent claims (Command Paper, paras 22, 25-27, 29)? There is also a significant role to be played by others operating in the personal injury sector, and there certainly needs to be greater co-operation between the insurance industry and claimant lawyers and sharing of data on potential fraudsters. This will help to stop fraudulent claims at source and there is a role for Government in broke ring an agreement. We will work with stakeholders to first identify what data relating to fraudulent claims can be shared. Stakeholders will also be asked to supply the Government with details of previous discussions on this topic, what issues are causinq delay and what further steps should be taken to facilitate an effective data-sharing agreement between the sectors. Officials are currently arranging meetings with stakeholder bodies to start this process. However, it is important to note that any Government intervention in this area should stop short of regulation.
14. What work is being undertaken to explore how a rule could be introduced to ban pre-med offers by insurers (Command Paper, para 24)? As stated in the Government response we are attracted to idea of a rule to ensure that medical examination and report is completed before claim can proceed (to provide greater certainty on costs and assessment of necessary treatment/compensation; and to stop pre-medical offers to settle). However devising such a rule is unlikely to be straightforward and nor will it be sufficient on its own. MOJ Officials are currently arranging meetings with the relevant stakeholders to discuss the options and early indications from the ABI indicate there is a willingness on the part of insurers to end this practice. However, further work needs to be done with the stakeholders and their regulators to ensure any action is effective.
15. What work is being undertaken by Government to improve the transparency of the motor insurance sector (Command Paper, para 30)? Lack of openness and transparency can detrimentally affect the perceived independence of medical experts. The Government supports greater transparency regarding financial and other links between insurers and other companies with interest in a claim. Our reforms will see experts being commissioned jointly by both the claimant and the defendant, and their payment not being dependant on the outcome of the claim. In addition, the Competition Commission is currently investigating behaviours and practices in the motor insurance sector, including the question of openness and transparency of the relationships between different parties involved in a personal injury claim. The Government will consider the results of this investigation and any recommendations made by the Competition Commission when they are made available. The Government will also consult with ABI and appropriate industry regulators on further ways to increase such transparency.

Annex B

Government should provide a breakdown of claims for non-whiplash injuries since 2008-09 and explain trend for increasing number of claims of this sort, as whiplash claims decrease (Annex D, para 2).

Table 1 provides a breakdown of motor injury compensation claims registered to the Department for Work and Pensions' Compensation Recovery Unit (CRU) since 2008/09. This is based on a July 2013 CRU snapshot of the data. The figures may be revised in future CRU snapshots.

Table 1 - Breakdown of Motor Injury Compensation Claims by injury type
Financial Year
Injury Type

Source: DWP Compensation Recovery Unit (CRU) July 2013. Figures are subject to revision.

The above table shows that there were around 820,000 motor personal injury claims (registered to the DWP Compensation Recovery Unit) in 2012/13, compared to around 630,000 claims in 2008/09, an increase of around 30%. This rate of increase has tailed off over the past two years, and the total volume of motor personal injury claims in this snapshot fell slightly between 2011/12 to 2012/13 (from around 830,000 to around 820,000).

The absolute number of whiplash claims rose from around 480,000 in 2008/09 to a peak of around 570,000 in 2010/11, before falling back to around 480,000 in 2012/13. Whiplash claims formed 58% of motor personal injury claims in 2012/13. The increase in motor personal injury claims between 2008/09 and 2012/13 has mostly been driven by claims with a description of 'neck or back' injuries.

Over the last five years, claims for neck and back injuries have almost trebled to around 270,000 claims in 2012/13. It may be that a change in claims-labelling behaviour is behind this trend, such that a large volume of claims which would have previously been labelled as 'whiplash' are now instead being labelled as 'back or neck' injuries.

Table 2 identifies the number of claims registered with the CRU since 2009/10 that were labelled as either 'post traumatic stress', 'PTSD' or 'psychological'. These figures are broken down by whether 'whiplash' was also mentioned. As above this is based on a May 2013 CRU snapshot, and the figures may be revised in future CRU snapshots.

Table 2- Number of Claims Registered with CRU labelled as either 'Post Traumatic Stress', 'PTSD' or 'Psychological'
Either PTSD or Psychological or Post Traumatic Stress AND: 2009/102010/11 2011/122012/13 Total
Whiplash also mentioned 1,4571,383 1,5601,473 5,873
Whiplash not mentioned 2,7452,715 3,0913,341 11,892
Total (PTSD or Psychological or Post Traumatic Stress 4,2024,098 4,6514,814 17,765

Source: DWP Compensation Recovery Unit (CRU) May 2013. Figures are subject to revision.

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Prepared 12 December 2013