The government confirmed today it is taking another run at whiplash reform, with a new Civil Liabilities Bill to tackle compensation culture around car insurance

whiplash reform

Battle lines have been drawn once again as personal injury lawyers and insurers resume their dispute over whiplash reform, following the Queen’s Speech announcement today.

The government confirmed today it is to introduce a new Civil Liabilities Bill to tackle compensation culture around car insurance and help reduce motor premiums by around £35.

The plans were temporarily shelved ahead of the general election, which resulted in a hung parliament.

Following the news today, insurance firms and lawyers on both sides of the debate have responded.

Discount rate

ERS claims Director Peter Smith welcomed the plans but also stressed that certain parts of the previous proposals needed to be rethought, such as concerns about claims management companies and McKenzie Friends moving in to occupy the space that would have been vacated by solicitors.

“We have been keen to point out that legislators need to anticipate the scope for abuse of previous proposals,” he added. ”It is worth remembering that the ban on personal injury referral fees as part of the LASPO reform implemented in April 2013 was intended to take the incentive to farm claims out of the system - nonetheless new RTA portal claims began to regularly exceed pre LASPO levels after 18 months.”

”As a result regulation needs to march in step with legal reform as a component of a fully rounded package in order to address this complex problem. The Finance Guidance and Claims Bill points in this direction by giving the FCA powers to implement a claims management regulatory regime.”

Insurers have also previously called on any changes to the whiplash reforms to be thought of in conjunction with changes to the discount rate.

Following the cut in the discount rate to -0.75% from 2.5%, it has been estimated the industry has taken a collective hit of £3.5n to its books.

Insurer bosses have also warned the rate cut will cancel any savings expected from the whiplash reforms.

AXA UK chief executive Amanda Blanc said today:Delivering meaningful reform to counter the whiplash fraud epidemic will be welcomed by honest motorists and insurers alike.

“We need to use this opportunity to also consider the impact of the Ministry of Justice’s decision to reduce the personal injury discount rate to minus 0.75% which is not representative of real investment practice and has put severe pressure on people’s premiums and the NHS.”

Regulatory gaps

Personal injury lawyers have also spoken out against the bill, which they claim will penalise honest claimants and drive dishonest claims to pop on in other parts of the claims sector where regulation is weaker.

Carpenters director Donna Scully said: “Despite all the warnings about the likely consequences, the gaping regulatory holes and the unanswered questions about how it will work in practice, it appears that the Government has missed an opportunity to engage on agreeing workable solutions and chosen once again to hurtle us down a path that will be predictably bad for the sector.”

Access to Justice (A2J) spokesperson Andrew Twambley, warned: “If these reforms become law 600,000 innocent people injured in car accidents through no fault of their own every year will have their rights taken away from them.

“If this Bill becomes law, prepare for more cold-calling and holiday sickness scams.”