As the government confirms that pre-medical offers will not be allowed for whiplash injuries after 31 May, Insurance Times explores how insurers may seek to circumvent this

Insurers that previously used pre-medical offers for whiplash injury claims may seek to propose alternative arrangements to claimant parties that are not “in the spirit of the rules” in order to maintain control on claims costs, following the implementation of the whiplash reforms on 31 May.

On 26 February, the government published The Whiplash Injury Regulations 2021, which form part of 2018’s Civil Liability Act – these are colloquially known as the whiplash reforms.

According to the document’s explanatory note, “these regulations specify the medical evidence that must be provided before a regulated person (defined in section 9 of the Civil Liability Act 2018) may invite a payment in settlement of, or offer payment to settle, or make or accept a payment in settlement of, an [road traffic accident] related whiplash injury claim”.

More specifically, this means that to ensure the settlement of a whiplash injury claim for claimants living in England or Wales, there has to be “appropriate evidence of an injury” in the form of a medical report that is provided by a “an accredited medical expert who has been instructed via a search of the online database of medical reporting organisations and experts held by MedCo Registration Solutions” or via “a doctor who is listed on the General Medical Council’s Specialist Register”.

A contentious tactic?

According to Ian Davies, partner and head of motor at law firm Kennedys, pre-medical offers have always been “an area of some contention”, with “lots of talk about whether it encourages fraudulent claims”.

“It’s been one of those tactics that’s really divided opinion as to the overall benefit and the individual benefit,” he added.

This is a view shared by Stuart Hanley, solicitor and head of the legal practice at Minster Law.

Typically used for lower value whiplash injury claims, Hanley said that pre-medical offers are often “a way that the insurer can try to settle a claim before the legal costs escalate and before the expense in the claim escalates, principally the cost of getting a medical report and the expenses associated with getting a client to that appointment”.

He continued: “If you are a cynic, you would say it’s a way insurers try to nip a claim in the bud and minimise the value of the claim.

“On the other hand, if you’re an insurer, you may say it’s a way to economically try to settle these cases before those expenses incur and actually medical reports don’t often add a lot in the lower end of the injury spectrum related to whiplash - they basically just give a prognosis and predicted outcome.”

Hanley added that a principal driver behind the Civil Liability Act is to counteract fraud opportunities, which is why pre-medical offers came within its crosshairs.

“The reasoning there is that if I’m a claimant and I know I’ve got to go to a medical [appointment], I’m more likely to only make a genuine claim. If I know that an insurer may well say to me ‘you don’t have to see anybody, you don’t have to have your injury verified, you don’t need to have your identity verified by the medical’, which is a second stage identification, it can potentially be seen to encourage fraudulent claims and people, if you like, having a punt and thinking ‘well I’ll claim I was injured and the chances are they’ll make me a pre-medical offer, no-body will ever find out that I wasn’t injured’,” he explained.

“Fraud is really the driving force behind a lot of the current reforms and that’s remained the case. The theory is if you ban a pre-medical offer, it will only encourage people to come forward if they’ve got a genuine injury that will be proved objectively by a medical report.”

Davies added that some insurers and claimant lawyers regularly use pre-medical offers, while others are decidedly against this practice. Of those that are happy to provide pre-medical offers, Davies noted they will have to “amend their working processes” ahead of the whiplash injury regulations’ enforcement date of 31 May, as pre-medical offers “will need to be removed”.

For insurer Zurich, the change around pre-medical offers will not have an impact, however.

The firm’s head of liability claims Calum McPhail said: “The standard approach for Zurich is that we do not make pre-medical offers on personal injury claims so the introduction of a ban on this as part of the whiplash reforms will not have any impact on how we deal with claimants.

“Our priority has always been to make a fair damages offer in respect of identified injuries.”

Alternative options

A crucial facet of the new regulations is that the ban on pre-medical offers is only applicable for whiplash injuries, defined as “a strain or some other soft tissue injury to your neck, your back or your shoulder that’s got a prognosis of under two years”.

This means insurers could still potentially make pre-medical offers for other kinds of injuries resulting from a road traffic accident (RTA), such as fractures, seatbelt-related injuries or even tinnitus, which Hanley said is “quite a hard condition to prove or disprove”.

He explained: “What we may well see is insurers looking to make pre-medical offers for the parts they’re allowed on, but boosting them up a little bit so effectively we all know that it does cover whiplash, but just not officially.

“There are always ways to try and test the rules and I think a lot of insurers have found that pre-medicals are a very good way to settle cases on economic grounds and there are many benefits to them.

“I think that will be the obvious way to [provide an alternative to pre-medical offers for whiplash injuries], to frame an offer within the rules, but perhaps wasn’t in the spirit of the rules.”

Hanley added that new regulations in general often take a couple of years to fully bed in and that “a lot of people test what the rules actually mean and I think that is what will create issues”.

Davies believes insurers may look to push rehabilitation services through their own providers as an alternative to pre-medical offers for whiplash injuries and that there will be “greater intervention offers”.

However, he noted that “there’s no easy way you can replicate” pre-medical offers with an alternative solution as they are “one, unique little piece” of the motor claims environment.

Non-whiplash injuries

Non-whiplash injuries are not included in the new awards tariff, which could act as a driver for those who wish to boost their compensation amounts because “the whiplash tariffs set quite low injury values compared to now, quite considerably lower than somebody would get for a current claim and a lot lower than what you would get for a similar injury that’s not a whiplash”.

Hanley added: “Some firms at the lower end of the market will perhaps be tempted by that route to try and push people to say ‘well are you sure you didn’t have another injury other than a whiplash’ to try and get them out of that whiplash tariff. Anything that takes them out of that very low tariff and gets them into a higher level of compensation if possible.”

Davies concurred: “I suspect there will be more argument now around rehabilitation, around credit hire, maybe even around vehicle repair costs and the like. And maybe more disputes will be apparent there.”

Muddying the waters

For Chris Chatterton, chief commercial officer of handl Group, the ban on pre-medical offers is “a good thing because pre-meds afford insurers the opportunity to under settle injury claims at the same time as allowing claimants to exaggerate their injury because there is no evidence. They effectively muddy the water, so we’re pleased the government has acknowledged this and legislated to outlaw the practice”.

His main concern, however, is how accessing medical reports and consequential rehabilitation will be treated once the Litigants in Person (LiP) portal has been launched because “this isn’t provided for in the new portal”.

“It may be that further work is required by the Motor Insurers’ Bureau, Ministry of Justice and rehab providers to develop the appropriate processes to ensure rehab provision is accounted for,” he said.

“We are pretty certain that the portal will need further work to deliver a full end-to-end claims journey for injured people, even after the May launch.”