UK & Europe
Insurance & Reinsurance
The headline news in the personal injury sector has been the delay to the whiplash reforms announced by the Ministry of Justice last week.
The MOJ confirmed that the whiplash reforms, due to be implemented on 6 April 2020, have been delayed until 1 August 2020. The delay had been expected, in the continued absence of publication by the Civil Procedure Rules Committee of changes to the Civil Procedure Rules and the pre-action protocol for those claims proceeding through the new Official Injury Claim ("OIC") portal.
The statement from the Secretary of State for Justice also confirmed that the proposed ADR facility, intended primarily to assist unrepresented litigants when liability was denied, will be removed altogether.
In the aftermath of the statement and widespread focus on the delay itself, some of the implications of the delay and policy decisions have become more apparent over the past week.
In order to ensure that the OIC Portal is ready and the package of whiplash reforms can be implemented on 1 August 2020, the Ministry of Justice has some issues to address:
Finalise the pre-action protocol and the rules (with the Civil Procedure Rules Committee)
Publish the updated tariffs for whiplash injuries
Prepare the legislative changes to the small claims track
Publish any additional medical reporting qualifying criteria
Pre-action protocol and supporting rules
The Ministry of Justice has confirmed that discussions with the Civil Procedure Rules Committee are ongoing regarding the required rules and pre-action protocol.
Indications are that these will need to be published in the next two to three months in order to allow the Motor Insurers Bureau time in which to integrate these rules in the OIC portal build.
It has been suggested that the settled tariffs will steer closely to the figures set within the draft Whiplash Injury Regulations produced in 2018 during the initial legislative stages of the Civil Liability Act.
Legislative changes to the small claims track
The statement on the delay effectively confirmed that there will be three small claims track limits for individuals in road traffic collisions:
|Individuals over 18, whether passenger or non-fault driver of a vehicle||£5,000|
|Vulnerable road users (pedestrians, cyclists)||£1,000|
The Government had previously confirmed that infants and protected parties would not be subject to the £5,000 limit but their whiplash injuries would be subject to the tariff. This prompted further concerns about the availability of representation for minors for those whiplash claims which (per the tariff) fell below £1,000.
The confirmation that all RTA claims by minors and protected parties will proceed in the fast track should allay those concerns, as it will allow the recovery of fixed recoverable costs. Nonetheless, whether this is reasonable or cost-effective will no doubt be kept under consideration.
Removal of ADR function
One of the oft-discussed elements of the OIC Portal was the proposed ADR function available for unrepresented claimants where liability was denied. This will no longer be available as "no practicable solution which gave sufficient coverage of ADR for claims could be found." In the alternative, the Minister of Justice stated that "bespoke processes to enable litigants to go to court to establish liability" would be developed.
Claims in operation
In the aftermath of the delay, indications have been given as to how claims will now progress through the OIC portal for both represented and unrepresented claimants, as well as issues that may arise:
If liability is denied by the insurer, and the claimant (represented or unrepresented) is unable to challenge the insurer's decision, then the claim will drop out of the portal and proceed to a hearing on the small claims track on liability only. Once liability is determined, should it be in favour of the claimant (whether partially or in full), the claim will return to the portal where a medical report will be obtained, and quantum determined.
If liability is partially admitted, then the claim will proceed as if a full admission has been made, with a medical report obtained, but the claimant will be able to challenge the partial admission in the portal. If the dispute continues through to the quantum stage, then the claim is likely to proceed to litigation via the small claims track.
Whilst these proposed processes may suggest that there may be value in insurers seeking to deny liability, meaning that claimants (whether unrepresented or otherwise) could be forced into the small claims track; the Ministry of Justice has indicated that management information from the portal will be supplied to the Financial Conduct Authority enabling them to identify those insurers who deny liability. For its part, the Ministry of Justice has stated that they "do not expect insurer behaviour to change post implementation."
The Government referred to the aforementioned 'bespoke processes' allowing litigants to establish liability in the courts, yet it is unclear whether any additional impact on the Court system has been considered, or whether an expedited process will be sought. It is known that some Courts are listing disposal hearings several months in advance, and it is possible that a claimant seeking a judicial finding on liability may wait several months, before looping back into the portal to negotiate quantum if successful.
Once a medical report is produced, the expert will be able to indicate if a further report is required, or can provide a prognosis period. The claimant can then download the medical report and check if it is factually correct. Once factually agreed, a claimant can either choose to wait out the prognosis period or have the medical report disclosed to the compensator/insurer.
Presentations on the functionality of the portal have indicated that on receipt of the medical report, the claimant (or representative) will be asked to input their claim valuation for their tariff and non-tariff injuries. It is unclear what assistance will be supplied to those unrepresented claimants when valuing their non-tariff injuries. It is perhaps inevitable that some claimants may overvalue their non-tariff injuries, meaning that agreeing settlements may be difficult without guidance, the outcome of which may be more claims litiigating on the issue of quantum with unrepresented claimants.
Further to this point, the MIB have indicated that where a medical report indicates that a personal injury claim is in fact valued in excess of £5,000, then insurers may be expected to make unrepresented claimants aware of this fact, albeit the extent of this proposed duty is unclear.