Prisons and Courts Bill

Written evidence submitted by the Association of Personal Injury Lawyers (APIL) (PCB 01)

Prisons and Courts Bill Public Bill Committee – Part 5: Whiplash – March 2017


APIL welcomes the opportunity to provide comments to the Prisons and Courts Bill Public Bill Committee. The reforms in Part 5 of the Bill have been created to tackle a ‘compensation culture’ which does not exist, and to deliver on a promise of lower car insurance premiums which won’t be kept.


The Bill provides the Lord Chancellor with a mechanism to fix the amount of compensation for pain and suffering for whiplash claims at levels which are derisory, offensive and certain to result in under-compensation. The Government has failed to recognise that the same injury can affect different people in different ways. It is for this reason why there is already flexibility as to how much compensation should be awarded. This guidance has been drawn up by the Judicial College, and allows judges to use their individual discretion when deciding on an appropriate amount of compensation for pain and suffering, based on the merits of the case [1] .

The most devastating aspect of any car crash is not damage to the vehicle, but personal injury and the very purpose of insurance is to provide recompense for that. The fact that motor insurance costs more because of an increase in the insurance premium tax, the rising cost of vehicle repair due to technological developments, and the increase in the number and cost of vehicle damage claims should not be used to undermine the basic purpose of insurance.

If the Government is absolutely determined to go ahead with tariffs, it should at least involve the judiciary in setting them at levels which are fair and which take into account not only the duration of the symptoms, but also the type and intensity of the injuries, as well as individual personal circumstances

A false premise for reform

These reforms, alongside the Government’s decision to increase the small claims limit, are based on a false premise. There is no ‘compensation culture’; insurers have failed to pass on previous savings to motorists; there is no evidence of a link between whiplash claims and insurance premiums; and there is no reliable data on fraudulent claims.

· During the second reading debate of the Prisons and Courts Bill on Monday 20 March, the Lord Chancellor spoke of a "rampant compensation culture", but there is no ‘compensation culture’. Two Government-commissioned reports have dismissed its existence, with a report by Lord Young of Graffham in 2010 referring to it as a "perception rather than reality" [2] , and a report by Professor Ragnar E Löfstedt in 2011 concluding there was no evidence for its existence [3] .

· The number of whiplash claims has fallen by 41 per cent since 2010/2011, according to the Government’s own Compensation Recovery Unit (CRU). Even when the whiplash statistics are combined with the number of injuries registered by insurers with the CRU as ‘neck and back’ injuries, there has been a significant fall of 11 per cent since 2011/2012.

· Data published by the Association of British Insurers (ABI) shows that the cost of personal injury claims to motor insurers has fallen by more than 12 per cent (£500 million) a year since legal reforms in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) were introduced in 2013 – from £4.1 billion in 2013 to £3.6 billion in 2015. Insurers promised that savings made from LASPO would be passed to motorists, but this never happened. ABI data on the average motor insurance premiums published in October 2016 shows that the average premium has increased by more than eight per cent since 2013 [4] . Premiums have risen by 13.5 per cent in the past year alone, according to Consumer Intelligence [5] .

· In 2013 the Government repeated a claim made by the ABI that seven per cent of motor claims were fraudulent, but the ABI’s own statistics clearly show that this figure of seven per cent includes both proven and what it is calls ‘suspected’ fraud. (ie, what the ABI thinks is fraud but which cannot be proven as a fraud). When the ABI separated the figures for proven and suspected fraud for the first time in 2014 it became clear that proven fraud was just 0.25 per cent of all motor claims. That includes policy-holders over-egging their own claims, or making false declarations in applications for insurance. Personal injury fraud will be a fraction of that 0.25 per cent, and fraudulent whiplash claims will be an even smaller fraction of that.

· In a report commissioned jointly by APIL, the Law Society and the Motor Accident Solicitors Society to review the impact assessment published alongside the Government’s original consultation, the economics firm Compass Lexecon found that in 2015 the number of whiplash claims and the net cost of motor claims fell by 12 per cent and three per cent respectively, compared to 2014. At the same time, however, the average motor insurance premium increased by four per cent. Compass Lexecon concluded that since premiums have increased while the number of whiplash claims and the net cost of claims have decreased, there is a lack of evidence of a link between the cost of claims or the number of whiplash claims, and the cost of motor insurance premiums.

A missed opportunity

The Bill is a missed opportunity to tackle cold calling, which is the real mischief in the personal injury sector.

Cold calling for personal injury claims exploits vulnerable people, and it should be banned. It is tasteless and intrusive. It generates the false perception that obtaining compensation for whiplash injuries is easy, even when there is no injury. It brings the whole sector into disrepute. Solicitors are banned from cold calling for personal injury claims, and APIL fully supports this.

Unfortunately the opposite is true of claims management companies (CMCs) which are free to contact people provided they adhere to certain rules. The problem is that the rules are often ambiguous and difficult to navigate. Recent attempts to curtail the worst excesses of CMCs appear to have had limited impact.


Instead of the Government banning cold calls, a vulnerable group of people is being singled out because another group representing commercial interests says the law should be changed. Government proposals will do nothing but treat genuinely injured people as objects and restrict their legal rights.

March 2017


[1] Judicial College Guidelines for the assessment of general damages in personal injury cases 13th edition, page ix

[2] Common Sense Common Safety, Lord Young of Graffham, October 2010, Page 19

[3] Reclaiming Health and Safety for All: An independent review of health and safety legislation, Professor Löfstedt, November 2011, Page 87

[4] https://www.abi.org.uk/Insurance-and-savings/Industry-data/Industry-data-downloads.

[5] http://www.consumerintelligence.com/articles/motor-premiums-rise-again.

 

Prepared 27th March 2017