Insurance & Reinsurance
The Government has published a response to the second part of the 2016 consultation on reforming the soft tissue injury claims process, covering issues such as credit hire and rehabilitation
In November 2016, the Government published a consultation on Reforming the Soft Tissue Injury Claims Process, (“the Consultation”) which ended in January 2017. Part 1 of the Consultation addressed issues such as the implementation of the whiplash tariff, increasing the small claims track for personal injury claims and the banning of pre-medical offers for whiplash claims. The Consultation response prompted the introduction of a raft of legislation and regulation, creating a seismic shift in the handling of low value motor personal injury claims.
Part 2 of the Consultation considered issues such as credit hire, rehabilitation and disbursements. In the five years since the Consultation ended, a response to Part 2 from the Government had not been forthcoming, but with little fanfare, has now been published.
Reviewing the response, it could be argued that the Government has taken the path of least resistance in their response, electing not to make any firm proposals on legislative or regulatory changes. However, as noted in the response, it had been 5 years since the summarised evidence and data were collated.
Significant changes were generated by Part 1 of the Consultation response and relying on outdated evidence from a market profoundly altered in recent times may not have been the most appropriate way forward.
Part 2 of the Consultation addressed two key issues:
Insurance Fraud Taskforce
In 2015, the IFT was created to investigate the causes of fraudulent behaviour. As part of the final report in 2016, the IFT made various recommendations, two of which were addressed in the Consultation.
The IFT recommended that the Government should consult on whether parties should be compelled to include referral sources within the Claims Notification Form. Noting that the responses seemed to be skewed by large numbers of duplicate responses from small numbers of claimant firm and credit hire companies, the Government nonetheless highlighted that positive action had been taken since 2017. The FCA is now responsible for the regulation of claims management companies, and since 2018, there has been a mandatory field relating to referrals for claims which enter the Claims Portal.
The IFT also referred the issue of whether claimants should be required to seek permission to discontinue less than 28 days before trial. There was a lack of agreement across respondents, and the same issues were encountered in the 2020 Civil Justice Council report on low value personal injury. Therefore, the Government declined to propose any specific changes.
The Government indicates it will continue to monitor behaviours on these two issues.
Call for Evidence
Evidence was gathered on five issues:
In respect of credit hire, the largest proportion of respondents favoured the option where the system would be managed with reference to industry codes of conduct (such as the General Terms of Agreement). However, there was not a single model with overwhelming support. In response, the Government has indicated it is prepared to monitor and improve existing industry agreements initially, with the option of making those agreements mandatory.
On proposals for a system of early notification – such as seeking medical treatment within the first 72 hours – this received significantly stronger support from insurance linked representatives. However, some respondents argued that this may place undue burdens on both claimants and the NHS. The Government indicated it did not intend to pursue this option further but will keep it under review.
Of the five proposals given to tackle the issue of rehabilitation, the extension of MedCo was the most favoured option, followed by proposals for defendants to pay all rehabilitation costs. In response, the Government stated that the feasibility of expanding MedCo in the longer-term may be considered, but the immediate future will be guided by discussions with the industry on improving the rehabilitation process.
There was very little support for restricting the recoverability of disbursements. It was acknowledge that the Part 1 measures “will already significantly limit the ability of a claimant to recover their legal costs.” Therefore, the Government has no plans to review this proposal further.
Under half of respondents supported the introduction of a Barème system for claims made in the UK, with those not in favour arguing it would lead to undercompensation. The Government did “recognise that there are good arguments for pursuing the implementation of a Barème system” but given the infancy of the whiplash tariff system, this proposal will be kept under review for the time being.
As noted above, the Government’s response is limited in scope and proposed measures. Firm action is proposed in respect of credit hire and rehabilitation, with the Government intending to engage with key stakeholders on specific issues.
Beyond that, no specific actions were identified in respect of the Insurance Fraud Taskforce recommendations, early calls for evidence and the recoverability of disbursements. The Government indicates it will continue to monitor and review these issues.
Ultimately, given the time period which has passed since the initial Consultation, it is perhaps unsurprising that there is a distinct lack of proposals made. There is a lack of data available on the impact of the whiplash reforms which relate the issues considered in this response. Once this can be considered, we may see the Government attempt to take more concrete steps.