Landmark legislation on reforming whiplash claims and calculation of the discount rate passes final parliamentary hurdle

The Civil Liability Bill returned to the House of Lords yesterday after being passed by the House of Commons. The amendments made in the House of Commons were considered and agreed as expected.

The Bill represents a landmark piece of legislation. The Bill will reform the methodology for calculating the discount rate, and forming part of the package of reforms aimed at reducing fraudulent whiplash claims.

Discount rate

Once the Bill receives Royal Assent, the first review of the discount rate has to be started within 90 days following commencement of the Bill. We expect that the Lord Chancellor will take this period to make calls for evidence.

Once the 90 day period is over, the Lord Chancellor must then make a decision on the rate within a further period of 140 days. We strongly believe that the Lord Chancellor will utilise the full periods available to him.

Therefore, we are expecting a determination in July/August of next year.

Whiplash claims

Despite Royal Assent to the Bill being expected shortly, the implementation of the whiplash reforms will be delayed until April 2020 to allow development of the new portal for RTA claims to conclude.

Continued lobbying by claimant representatives seeking to mitigate the impact of the Bill on their practices is likely to be directed at the small claims track changes also forming part of the reforms. These changes will increase the small claims track limits for RTA-related injuries to £5,000 and EL/PL claims to £2,000.

Lord Keen confirmed that the secondary legislation required to make the change to the Civil Procedure Rules is expected to "be brought forward in the second half of 2019".

We will be providing commentary shortly on what is likely to happen in the near future for whiplash claims now that the Bill has passed.

Other changes

The final version of the Bill also incorporates a clause specifically addressing the proposed savings on motor insurance policies. The FCA will now be involved in ensuring that insurers can evidence they have passed on savings resulting from the Bill. The Government stated that "the exact requirements on insurers will be set out in secondary legislation laid by Her Majesty's Treasury."

Lord Keen stated that "I am confident that Clause 11 allows the Government to hold insurers to account against their public commitment to pass on savings from the Bill in a rigorous but proportionate way."

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