Changes to whiplash claims arising from road traffic accidents, which were brought about as a result of The Civil Liability Act 2018, have been in force for almost 6 months now. The reforms were introduced to reduce the number of fraudulent claims being made, as well as reducing the costs of motor insurance premiums. Some of the main changes introduced by the reforms include:
- Raising the Small Claims Track limit to £5,000, removing the ability for Claimants to recover any legal costs for these types of claims.
- The introduction of a fixed tariff of damages awarded by the Courts for pain, suffering and loss of amenity for whiplash injuries sustained as a result of a road traffic accident.
- A ban on claims being settled without medical evidence in the form of a medical report.
The introduction of these reforms raised a number of concerns regarding access to justice for vulnerable road users, as well as fears that many solicitors specialising in these types of claims would suffer financially.
Reduction in RTA Claims
Since the introduction of the new whiplash reforms on 31 May 2021, there has been a huge drop in the number of road traffic accident claims. David Parkin, the deputy director for civil justice and law at the MoJ stated at the Motor Accident Solicitors Society conference in October attributed some of the reduction in claims to the reduction in motorists due to Covid.
Whiplash claimant representation
When the reforms were first introduced, there were fears that many claimants would go unrepresented in whiplash claims; however, the majority of whiplash claimants are still seeking legal representation for their cases.
Although the Official Injury Claims Portal was set up so that litigants in person could submit personal injury claims for whiplash injuries, only around 10% of these claimants have no legal representation, despite the fact that legal costs for claims valued below £5,000 are unrecoverable.
At the annual MASS Conference, Sue Brown, the new chair stated:
‘It is unclear at this point whether [the low self-representing figures] are because claimants are deciding not to pursue claims, or whether it is because they are unable to pursue their claims without representation, unable to find the OIC or sufficient sources of information or advice, or for some other reason.”
There were also concerns that insurers would take advantage of the situation and the likelihood of them denying liability for claims would be increased; however, this does not appear to be the case. In the first quarter, liability was denied on 2,447 cases; however, only 4% of these cases involved litigants in person.
David Parkin stated:-
‘Transparency and scrutiny is absolutely vital in this online claims system. Our perception is that the system launch and the first three months have been relatively smooth for a government-associated IT system. It is not without teething problems, but it seems to be working relatively well.’
The OIC has confirmed that in the first quarter, only 33% of claims were tariff-only and 61% were a mixture of claims involving multiple injury. This means that there are ongoing issues regarding the compensation awards for other injuries that fall outside of the boundaries for the new tariff system. David Bott from Bott and Co stated:-
‘Up until the Court of Appeal says what damages are there is going to be a range of different behaviours. All the way through the process we cannot say to our clients what the value of the claim actually is – both sides are in this awkward position where nobody knows that value of a claim.’
The future of RTA claims
Sue Brown further stated:-
‘It is early days, but OIC seems to be working reasonably well for professional users, although there are real problems with A2A for both claimant representatives and insurers which need to be resolved. The system will be fit for purpose only when it works for everybody.’
It is clear that the whiplash reforms are having a major impact on the personal injury market. Although some claimants are still seeking legal representation, many solicitors will be reluctant to take on whiplash claims as legal costs are unrecoverable. Some solicitors have introduced contingency fees of up to 35% of damages; however, the amount of damages awarded in these types of claims are so low that many firms may believe they are not worth taking on.
The number of claims being pursued may also continue to fall as many whiplash claimants may feel it is not worth the hassle of pursuing a claim through the OIC as compensation amounts for injuries have reduced significantly. Those considering legal representation may also be put off by the high contingency fees.
How can Recovery First Assist?
Recovery First offer a positive solution for those affected by the whiplash reforms and wishing to exit the market to focus on other areas of law or for those requiring a structured exit from the legal market.
We help law firms to withdraw from the legal market whilst ensuring 100% of the recoverable WIP value is retained by the law firm. We work alongside solicitors, accountants, restructuring and corporate recovery specialists to ensure the most profitable outcome is achieved on any file transfer agreement.
For a confidential chat about how Recovery First could assist, email David Johnstone at firstname.lastname@example.org or telephone on 07887 796 989, or contact Sally Dunscombe at email@example.com or 07774 205 870.
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