Hoodwinking the Government over small claims reforms

Qamar Anwar takes aim at the Government’s proposed small claims reforms and says that it has had the wool pulled over its eyes by the insurance sector

The influence of the insurance sector over our Government is as clear as ever. With publication of the Ministry of Justice’s (MoJ) consultation: Reforming the Soft Tissue Injury (‘whiplash’) Claims Process insurers have somehow managed to hoodwink the Government into believing that all victims of RTAs are frauds, all CMCs cold-call and lawyers actually chase ambulances.

The consultation has falsely predicted a £40 saving on insurance premiums for consumers, yet there is no way of monitoring and enforcing it, just as there wasn’t after the implementation of the LASPO Act.

Worse still is the revelation in the impact assessment accompanying the consultation that even the MoJ doesn’t expect insurers to pass on all the savings – working on the basis that about 85% of £1.3 billion would go back to motorists, that left insurers with a clear £200m windfall. Besides, the introduction of the increased Insurance Premium Tax (IPT) announced in the Budget, will put a stop to any hope consumers had of actually seeing their insurance bills cut.

I have a better idea for passing on £40 to every motorist: When it comes to renewal time the industry could cease their annual premium hike charade designed to get time-poor individuals to stump up more cash and instead just give the real price. This would be a fairer and more transparent way of passing on savings to motorists. The fact that the Government hasn’t explored this with the insurance industry just highlights the stranglehold the insurers have over them.

The reality is that these small claims reforms do not tackle the issues raised. If fraud is the real issue, then tackle it at source and make a real stand against it so that everyone benefits.

Unscrupulous people will always look for loopholes but scams like “cash for crash” have to be tackled at source, not by penalising innocent victims. It beggars belief that the Government does not appear willing to tackle organised fraud.

The majority of CMCs working in the PI market have very robust procedures in place to detect fraud. In fact, our client base demands it of us – solicitors want real, qualified leads. Further, all of the solicitor firms we work with apply the same level of vigour to tackling fraud that we do. So why can’t the insurers do it?

However, what is perhaps starkest about the consultation is the complete lack of meaningful evaluation about what happens to an individual when they have an accident and make a claim. There is no real analysis of the impact on them physically, mentally and economically, as well as the associated ramifications for their wider family. Instead innocent victims, at the behest of the mighty insurance industry, are lumped into the pile of fraudulent claimants.

Economic fallout

As well as the health issues implications – even from minor whiplash – the economic fallout can be just as debilitating.

There is a real danger that people who, for example, haven’t been paid for a couple of weeks after an injury, may well jump at £425 just to pay the bills. They will do this with no real knowledge of how their injury will manifest in six months’ time, although of course it will be too late by then.

Those that are able to fight face a modern-day David and Goliath battle going up against the insurers and their lawyers and will be forced to rely on McKenzie Friends. Hardly a level-playing field.

We believe that all personal injury claims should be assessed on the impact they have on each individual. By capping or even removing damages, the Government is essentially trivialising what can be a serious injury with long-lasting consequences. If compensation is to be pared right back, then at the very least, there should be some kind of rehabilitation scheme set up to ensure injured people get the help they need to recover. However, this will not cover the impact an injury will have on an individual’s life.

The proposals fail to outline how innocent victims should handle their claim. Will it be through a consumer facing portal that then allocates a doctor? If so, who pays for the doctor should the claim not proceed? There are still too many unanswered questions about how the innocent victim will fare in this process.

At First4Lawyers, we would like to see transparent data about how many car accidents there are in the UK as a whole in comparison to how many claims are actually made, yet this data just isn’t available.

Surely this is the starting point before we reach a true picture of any so-called compensation culture?

Qamar Anwar is managing director of  First4Lawyers

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