Tom Broughton says the main arguments against pushing ahead with personal injury reforms are more political than practical
The arguments to push ahead with major reform of the personal injury claims process are as logical as they are compelling.
The insurers’ lobby is clear on its position; the system is fundamentally broken. It is slow, complex and adversarial. Insurers believe they are getting a raw deal. ABI figures suggest that £2bn a year is paid to claims handlers or lawyers, that’s nearly 40 pence for every pound paid out in personal injury compensation.
The ABI believes too that rehabilitation, and getting people back to work, is undervalued in the whole process. After all, you’ve only got to stumble across a daytime TV advert almost encouraging exaggerated or opportunistic claims to realise that there is a problem somewhere along the line.
So why can’t the government just quickly impose a new process for resolving these claims before claimants resort to lawyers? Or fix the fees charged by lawyers across the board? The answer is that they still might. But it would be difficult for it to happen in isolation and without looking at the system as a whole. The problem is that if the government was to follow this route then it would have to look at the lucrative systems of lawyer referral fees and more importantly, worry their union comrades with the issue of access to justice for the masses, which is pretty lucrative in its own right. And what under-pressure Labour government is going to do that?
So the danger is that the main arguments against pushing ahead with these much needed reforms are more political than practical. In the meantime, and if we work on the assumption that the reforms will be watered down if not forgotten about, then the insurers will have to work on market-led solutions to redress the balance. Options on the table could take the form of voluntary codes for lawyers, claims handlers and insurers to follow but this is more likely to pan out through agreements developed by individual insurers to ensure best practice on time scales and payouts.
The government’s proposals on this subject were due out in the autumn of last year but since then there has been radio silence. It is doubtful that the government will listen to those who have shouted loudest in this debate, but more to those who have whispered in the right ears.