PI reform: The good, the bad and the ugly

Qamar Anwar on the new proposed PI sector reforms and how the Government could ensure that insurers pass on a £35 insurance bill saving to motorists

Well, you can’t say you weren’t warned.

We at First4lawyers were adamant that it wasn’t yet time to get the bunting out after the snap General Election saw the Prisons and Courts Bill shelved. We all knew that if the Conservatives formed the next Government then there was every chance that the personal injury (PI) reforms contained in the Bill would be revived.

It was therefore disappointing, although not entirely surprising, when on 21 June we had confirmation in the Queen’s Speech that the Government did intend to press ahead with personal injury reform in the guise of a new Civil Liability Bill.

Although, as yet, details are lacking, we do know that the proposed purpose of the Bill is to “ensure there is a fair, transparent and proportionate system of compensation in place for damages paid to genuinely injured personal injury claimants”. Which, on the face of it, is perfectly reasonable and wouldn’t meet with disagreement.

However, the motivation for doing so has a predictable tone, with the Government claiming the proposed legislation will tackle “the continuing high number and cost of whiplash claims to put money back in the pockets of motorists through reduced insurance costs”. It’s also said that the main focus of reform is to “tackle the rampant compensation culture and reduce the number and cost of whiplash claims” by banning offers to settle claims without the support of medical evidence and introducing a new fixed tariff of compensation for whiplash injuries with a duration of up to two years.

The promised saving of £35 a year for motorists is, as we all know, at best fanciful and at worst, incredibly misleading, as there is no way of monitoring and enforcing it.

The initial consultations about these proposals recognised that even the Ministry of Justice doesn’t expect insurers to pass on all the savings. Besides, the introduction of the increased Insurance Premium Tax (IPT) will put a stop to any hope consumers had of actually seeing their insurance bills cut.

I have a better idea for passing on £35 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 offer the real price.

While it was only right that PI reform is placed in a standalone bill, rather than being tacked onto other legislation that takes most of the attention, any legislation should look in more depth at the entire claims industry and put as much scrutiny on insurers as it does on those making a claim.

At First4Lawyers, we are undeterred and will continue to fight any proposals which inhibit innocent injury victims from accessing justice and call on the new justice secretary, David Lidington, to facilitate a meaningful and honest debate about what is right and wrong about how personal injury victims are treated, the way in which insurers operate and the importance of the whole sector coming together to stamp out fraud.

One piece of welcome news in the Queen’s Speech however, was the new Financial Guidance and Claims Bill. Although largely expected, we certainly welcome tighter regulation of claims management companies (CMCs) – we’ve been calling for it over many years.

The Financial Conduct Authority has a proven track record for dealing with financially-related firms and I suspect it may have stronger regulative powers than the current regulators. However, we really would like to see more distinction made between the regulation of financial services CMCs and non-financial services CMCs as this will help all on the road to improved regulation of the sector.

Only 4% of complaints about CMCs relate to PI, so it is a missed opportunity to better regulate bad practice by lumping the good, the bad and the ugly all into one.

Qamar Anwar is managing director of First4Lawyers

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