The insurance industry must look for its own solution to address the deficiencies in the claims process
So what next for the insurance industry after the government’s limp and already much maligned reforms to the personal injury claims process?
The government had pledged to reform a “broken” personal injury system, spending months working on a consultation paper that was seen as well-balanced although controversial in parts.
But after months of delay in publishing its final proposals (the government had originally planned to publish them last autumn) the report finally saw the light of day this week – to derision from the insurance industry.
Branded as toothless and a waste of time and effort by lawyers and insurers and brokers, the paper was seen an ineffectual response to the systemic problems that the government itself had identified.
It was claimed that the government had bowed to pressure from the trade unions and their lawyers. Others said the government had times to the publication of the report to coincide with the parliamentary recess in order to avoid criticism.
Despite promising a radical overhaul of the personal injury system, the final proposals offer little in the way of reform. Only low value road traffic accident claims will see a new fast track process, with other the process for other liability claims left largely untouched.
“They [the government] have recognised there is a problem but what they’re proposing doesn’t solve it,” says Dominic Clayden head of claims at Norwich Union.
The government ducked the issues of extending the fixed fees regime, a key area of for insurers, and made no changes to the after-the-event (ATE) legal expenses market.
The insurance industry was furious, with the exception of the legal expenses providers who were relieved their business models were not upturned by the reforms.
Mike Timmons, head of underwriting at DAS says: “The Ministry of Justice has evaluated the responses to its consultation and has taken a very sensible and balanced view.”
ATE providers will now look to develop a product to fit in with the new fast track process for low value motor claims.
But with the government seemingly shutting the door – at least for now – on wider reforms of the personal injury system, what are the options for insurers?
It is likely that insurers will now push forward with their own solutions to speed up the process. Allianz said it will push ahead with a fast-track process that it had developed in anticipation of the reforms. Other insurers will no doubt develop their own approaches. There is scope for an industry-wide protocol to be developed.
Further lobbying is needed. A Conservative government could be in place after the next election, so the insurance industry should ensure reform is on the Tory legislative agenda.
Meanwhile, if the motor claims pilot is successful an argument to expand it to other personal injury claims could be persuasive.