Those who follow the personal injury claims industry will be aware that the UK government has now decided to delay implementation of reforms announced back in 2015 until at least 2020. While very few parties will disagree with the theory behind the reforms, it is the way in which they were going to be brought in and the impact on relatively minor personal injury claims, including access to legal aid, which caused most concern. So, what is the UK government now proposing and what does this mean for the UK personal injury claims industry?
Powerful Justice Select Committee
The Justice Select Committee has been critical of the Ministry of Justice personal injury claim reforms and extremely vocal of late. While the government has backtracked with an array of excuses, the fact is that the delay until 2020 means that the changes will not come into effect until five years after they were originally presented. It is worth noting that the Justice Select Committee suggested that the new online platform should be “delayed at least a further year” from the previous 2019 date, which suggest there could be additional delays further down the line.
Online Platform
The proposed online platform will, in theory, speed up the claims process although it is not just this element of the reforms which are being delayed. One criticism of the online platform which has not been overly publicised is the fact that the new technology platform will be built and administered by the insurance industry. The legal profession is extremely concerned that more control is shifting towards the insurance sector when it is the legal profession which is, in theory, more on the side of the injured parties. In reality, there is no perfect solution to the online platform, other than the project being placed under the control of totally unconnected third-parties, but would they know exactly what is required?
Access To Legal Aid
Increasing the small claims limit to £5000, with particular emphasis on high levels of fraudulent activity in whiplash claims, seems fine in theory. While this will reduce legal expenses, and access to legal aid, it may mean that many relatively small, but totally valid, claims are not pursued. Even though many people still see the personal injury claims market as something of a “cash cow” the fact is it has a meaningful and serious role to play. If negligent third parties are not held to account, and feel no financial pain, where is the incentive to improve systems, procedures and ultimately the safety of their employees and customers?
It will be interesting to see how the government tackle this growing problem because the whole idea of the personal injury claims market is to hold negligent parties to account and reduce the chances of repeat offences.
Reducing Fraud
While there is no doubt that fraudulent activity within the personal injury claims industry is still a problem, many believe the proposed reforms are akin to using a hammer to crack a nut at the expense of victims. The insurance industry has invested literally hundreds of millions of pounds into antifraud systems and on the whole this has proven to be extremely effective. The main problem seems to be that the fraudsters/scammers are moving with the times and tend to be one step ahead of the law. When the door to significant uncontested whiplash claims seems to be closing the fraudsters simply move on to other issues including a loophole in holiday injury claims regulations. There is also the issue of different personal injury claim regulations in England and Scotland which in many ways plays into the hands of the fraudsters.
It would be naive to suggest there has not been an increase in prosecutions for fraudulent activity in the personal injury claims market but more needs to be done. We are starting to see prosecutions for actions which in years gone by may not have been pursued through the courts. In some ways you could argue this is a case of short-term pain, increased costs pursuing fraudsters, but long-term gain with a strong signal sent out to those indulging in fraudulent activity.
Time For Action
We can only hope that the government is not just kicking the personal injury claim reforms into the long grass for the next government to resolve. In reality we are three years further down the line from the day the reforms were first announced but no real progress has been made. If you take a step back and look at the situation from a distance, the proposed online portal appears tilted towards the insurance industry while attempts to reduce fraud may remove the important option of legal aid from many claimants. At this moment in time it does look as though the powerful insurance industry is to a certain extent pulling the strings of the UK government behind-the-scenes.
Compensation Awards: The Two Important Elements
While the UK government is fighting with the insurance industry and the legal profession with regards to the implementation of personal injury claim reforms, the underlying compensation framework will not change. Compensation consists of two specific payments known as general damages and special damages. It is important to not only appreciate these two payments in isolation but understand what they reflect.
General Damages/Pain And Suffering
It is better to give an example of general damages which can result in payments of between £1090 and £2230 in the event of an accident resulting in immediate unconsciousness and death within one week. You may ask yourself, how can a court place such a low figure on the death of an individual as a consequence of negligence?
The key to this is the fact that general damages relate to pain and suffering and in the event of a relatively quick death, looking at the facts in the cold hard light of day, there is no long-term pain or suffering for the claimant. On the flipside of the coin, were an individual is paralysed and expected to have a relatively long life, compensation anywhere between £258,740 and £322,060 is available. While these are the two extremes of general damage payments they do reflect compensation for extreme pain and suffering. However, general damages need to be appreciated together with special damages.
Special Damages/Additional Costs And Loss Of Income
Calculating special damages is a relatively simple procedure in theory, taking into account an array of different elements such as:
- Medical expenses
- Future medical expenses
- Loss of income
If we look again at the example involving a relatively quick death with minimal pain and suffering, family, partners and legal representatives of the deceased can still pursue compensation. Where there are children and dependents they can claim for loss of income, which can be fairly significant especially where the individual died relatively young. In this scenario there may be minimal medical expenses incurred prior to death but amalgamating the loss of income/compensation for pain and suffering can lead to a relatively high total compensation package.
If we look at injuries involving paralysis, taking into account long term medical expenses, as well as loss of income, will obviously lead to a much higher compensation awards. Whether or not claimants agree with the system, there is an element of common sense.
Conclusion
While there is a need to introduce reforms into the personal injury claims industry there is also a need to educate the public on the compensation structure. Headline figures relating to a relatively quick death will surprise many, but they need to be taken into account with special damages including loss of earnings. This is the perfect time to clear up historic myths associated with the personal injury claims sector and inform the public that incoming reforms are necessary to combat fraudulent activity.
