Insurers promise they’re “not going quiet” as Ministry of Justice delays compensation reforms.
Insurers have pledged to continue to push for action following the news that the government has delayed reforms to compensation for minor whiplash injuries.
Market experts stated that while the postponement of the consultation was disappointing at first, the Ministry of Justice’s remarks that reform was not “off the agenda” was proof that changes in this area were still coming.
“We’ll be pushing on all fronts for this to happen and we’ll be continuing to shout about the things that are happening to our customers that we think are wrong,” Rob Townend, claims director at Aviva UK General Insurance, said. “We’re not going to go quiet on this subject.”
One of the reasons given for the delay is the vote for the UK to leave the European Union, which has meant that the Ministry of Justice has been distracted by other issues.
Difficult solution
However, according to David Williams, technical director at Axa Insurance, another reason is that one of the two original proposals was too difficult to find a possible solution for.
“One was very straight forward, which was to increase the small claims limit to £5,000,” Williams explained. “But trying to reduce the number of whiplash claims by passing legislation that could potentially prevent other genuinely injured people from getting general damages is a massive and complicated can of worms.”
Meanwhile, Andrew Twambley, spokesperson for Access to Justice, said the decision to put the reforms on hold was “great news for the injured public”.
“Prior to 13 October the Association of British Insurers and the insurance industry were on a mountain of power, whereas the power now has been shifted,” he argued. “There’s now an equal playing field and more of an appetite by both sides to get together, collaborate and sort it out.”
His view that it is now up to the interested parties to work collaboratively and provide a solution was echoed by players in the insurance industry.
“It’s a great opportunity for insurers and the claimant lobby to, rather than just being abusive to each other, come up with something which would achieve what the government is seeking to do that all parties could agree on,” Williams stated.
Pushing for change
Graeme Trudgill, executive director at the British Insurance Brokers’ Association, noted that the broker trade body shared the insurers’ concerns and would continue to push for change.
“The big cost on motor insurance due to something like whiplash means that we are seeing motor rates that are quite high and we’ve seen some quite significant increases over the last three to six months,” Trudgill continued.
“That’s always a difficult one to explain away to a customer, so we want fairer pricing and competitive rates for customers. We also don’t like fraud.”
Matt Munro, chief executive officer of broker iGo4, said that whiplash claims were an issue for brokers as well as insurers, but highlighted that the reforms originally proposed were too widespread. He argued that there needed to be a balance between “eliminating fraudulent, aggressive claims and the rights of those that have been injured”.
“Something needs to change because there’s still a lot of unhelpful and unneeded activity being done by claims management companies, which will create spurious claims and fraud,” he continued. “There definitely needs to be some type of reform, but it must be focused on the right things.”
Moving forward
One solution that has been aired previously, and clearly remains at the forefront of the experts’ thinking, is to reduce the period of time after an accident that a person can make an injury claim. The aim would be to stop claims management companies from contacting people about accidents that happened years before.
In addition, Townend pointed out that the compensation culture also needed to be tackled, citing the example of organised criminal gangs staging accidents and “putting people in harm’s way”.
“This really is about the consumer and everybody thinks whiplash is a victimless crime, but it’s not,” Townend concluded.
“We’re calling for the consultation to be issued, because then all stakeholders will have the opportunity to put forward their solution to the problem.”
