Expert view: Many a slip twixt cup and LIP

When the Ministry of Justice let it be known recently that the date for its whiplash reform programme has formally slipped six months to April 2019, there was a collective shrug of tell us something we don’t know. In the absence of any legislation, it had been apparent for months that October 2018 was going to be missed. The new date did, though, serve to emphasise that the period of waiting is nearly over. To stand any chance of hitting the new deadline, the Bill needs to be wrapped up by July before MPs hit the beaches. That can only mean that it is coming, soon.

Thinking about the how the reforms will impact upon fraud dominated the recent meeting of the Insurance Times Fraud Charter. The group heard an update from Sue Brown, a director of both Portal Co and MedCo, and whilst she was careful not to divulge too much currently under discussion with the MoJ, what she did say was very interesting.

The new LIP Portal for litigants in person (LIPs), to be built under the guidance of the MIB and paid for by the insurance sector, is in its very early days. There is little doubt that it will be a complicated and difficult project, having to be simple enough for LIPs to navigate the claims process, enabling robust fraud checks to take place and being integrated with both the existing Portal and MedCo. Can such a project move from the planning stage to fully functional and fit for purpose within a year? There are clearly many questions, such as what happens during a liability dispute or when LIPs can’t settle in the Portal, that remain unanswered and some technical challenges.

It is probably fair to say that the prevalent view amongst the insurers present was that despite the effort and cost, in the end LIPs are unlikely to use the new Portal, even if they know of its existence, because it will prove too onerous and complicated for a much-reduced claim.

The logical next step is, however, far more worrying and is likely to have a direct impact upon the levels of fraud. The combination of both the low fixed tariffs proposed and the increase in the Small Claims Limit to £5,000 will likely mean that it is not claimant solicitors who support LIPs through the process of the new Portal, but CMCs. Actively prevented from pursuing claims directly under the current Portal, the new one will be an open invitation for CMCs to operate, providing “guidance” to confused LIPs and almost certainly increasing the risk of fraudulent behaviour. As a government assessment recently stated: “there continues to be widespread malpractice among CMCs”.

The new LiP Portal and full transfer of the CMC regulator to the FCA all need to be in place and tested to work before implementation. The lessons of past mistakes must be learnt before there is a rush to implementation. April 2019 looks rushed given the scale of the challenge. The errors created by an ill-conceived, disproportionate and unfair regime will only be multiplied by an overly hasty and badly executed implementation.