Source fears watered-down proposals destined for ‘political long grass’ before election

The Ministry of Justice (MoJ) has delayed the implementation of controversial new rules governing the personal injury claims process until April 2010 to give insurers and lawyers more time to prepare and comply.

The postponement, outlined in a government email to interested parties sent this week, will be met with widespread despair by insurers. They have seen the reforms, which were pencilled in for October 2009, watered down substantially since they were first proposed in 2007.

Sources close to the reforms have questioned whether they will now take place at all as several other linked reviews are currently under way, including the Jackson review of civil costs.

With a general election due to take place before next May, the delay could prove fatal for the reforms.

“Is someone kicking this into the political long grass?” asked one source.

The move follows a government summit of insurers, lawyers and trade associations this week.

The government said in 2007 that the claims process for personal injury would be overhauled and streamlined following widespread criticism of the system as legal costs were too high. Heavy lobbying from vested interests, including trade unions, has seen the proposed reforms substantially watered down since then.

The current proposals focus solely on motor claims of up to £10,000, with other personal injury claims exempt, including employers’ liability claims.

Insurers threatened the government with legal action after the final proposals for the overhaul of the system were announced, giving insurers 15 days to respond to a claim.

A source close to the negotiations told Insurance Times: “This is a double-edged sword. On the one hand, everybody wants clarity on the process after months of uncertainty, but on the other hand everybody needs time to position their businesses to be ready for the reforms.”

Anthony Hughes, president of the Forum of Insurance Lawyers (Foil), questioned the MoJ’s timing. “There is a level of disappointment,” he said. “Questions need to be asked and answered of the MoJ in terms of where does this leave us?”

Nick Starling, the ABI's director of general insurance and health, added: “We have long been saying that the personal injury reforms have taken too long not to go far enough. The reforms of the system need to be sooner rather than later. We also believe that they should not be just on motor, but on employers’ liability too.” He added that the reforms should be simplified overall.

However, the Motor Accidents Solicitors Society (MASS) welcomed the reforms.

A Ministry of Justice spokesperson said: “The Ministry of Justice has worked extensively with stakeholders to develop a new claims process for Road Traffic Accidents Personal Injury claims.

"Ministers are committed to delivering the new process as soon as possible but, in view of the need to ensure that this can be effectively and smoothly rolled out, have agreed that implementation should be deferred until April 2010.”

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