PI reform will result in legal expenses product innovation, says Arc Legal

Arc Legal Assistance has said that the legal expenses insurance industry has been handed an opportunity to develop and introduce new product and service models in light of the Government’s whiplash claim reforms.

In a consultation response on the reforms published yesterday, the Government unveiled a new tariff system for RTA-associated injuries which have radically reduced the amount of damages that can be recovered by claimants.

From October 2018, damages will be set at £225 for injures that last up to three months, £450 for injuries that persist for six months, and £765 for those that affect the claimant for up to nine months.

For longer RTA-caused ailments, claimants will receive £1,190 if they last up to a year, and £1,820 if they continue up to 15 months. If claims are for pain and inconvenience that continue for 18 months and two years, compensation will be calculated at £2,660 and £3,725 respectively.

The tariffs were revealed shortly after the publication of the Prison and Courts Bill, which contained confirmation that the Government is to increase the small claims limit for RTA-related personal injury claims to £5,000. The small claims limit or all other types of personal injury claim will go up to £2,000. The Bill also contained provision to ban claim settlements made without medical evidence.

Richard Finan, director of Arc Legal, said: “With focus on the importance of having the customer at the centre of any product development, we believe there will be the opportunity to introduce new servicing models for lower value claims.

“A ‘one size fits all’ approach to legal expenses will not be appropriate. We look forward to working with our existing and new partners to offer the flexibility to support their customers’ and respond to the needs of different business strategies. What is clear is that legal expenses products must remain relevant and deliver value.

Finan said that in anticipation of the reforms, Arc Legal had already started to model how the current and new legal insurance processes could respond to them.

“We are now in a great place to be able to fully assess the opportunities based on the information provided,” he said.

“These reforms will add to the value of LEI, giving it even greater relevance and benefits to customers.”

Mark Dugdale