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A surprise attack on whiplash claims was launched last year,
when Jack Straw denounced referral fees as a "racket" at
the root of a phenomenal growth in the number and value of claims
for personal injury. Representing 80% of all claims he said,
whiplash is the perfect vehicle for claims management companies to
maximise income from referral fees: "a soft-tissue injury that
no scan or X-ray can pick up, so that claims rely on the
patient's description."
He was highlighting one of the major problems with whiplash
claims – their value as a commodity.
What has happened since then?
There has been action on two fronts to tackle the issue.
The funding reforms contained in the Legal Aid, Sentencing and
Punishment of Offenders Act 2012 - including the ban on referral
fees, the ending of recoverability of success fees and after the
event insurance - together with the confirmed increase of the
threshold for RTA portal claims to Ł25,000 are aimed firmly
at reducing both the amount of litigation and costs.
The Transport Select Committee also reopened its investigation
into the rising cost of motor insurance. Its findings resulted in
the Government committing itself to reducing the cost and number of
whiplash claims. The then Justice Minister Jonathan Djanogly
announced a forthcoming consultation on the use of independent
medical panels to tackle "questionable medical evidence"
and an increase to the small claims threshold in personal injury so
that more claims can be dealt with at lower cost.
What next?
We await the consultation and will consider it in more detail as
soon as it is published. On 10 September 2012 the following
announcement was made
"The Government will shortly publish a consultation
document on the introduction of independent medical panels and on
whether to amend the small claims threshold for damages for
personal injury claims. The consultation document and its related
impact assessments will be available to download from the Ministry
of Justice website following publication.
The Government is committed to finding ways of tackling
fraudulent and exaggerated whiplash claims, while ensuring that
people who have suffered a genuine neck injury can continue to get
appropriate compensation. Contributions and evidence from
stakeholders will be sought on ways to reduce the number and costs
of whiplash claims, and on the potential impacts of these proposals
on affected groups."
In the meantime, even the Leveson Inquiry touches on the issue
of whiplash claims. The Transport Committee invited the Government
to send a clear message to the insurance industry that the data
protection legislation must be fully respected and it supports a
Justice Committee recommendation for stricter penalties for
breaching the Data Protection Act 2008. The Government proposes to
await the outcome of the Leveson Inquiry before considering the
issue further.
Will it be enough?
Whilst these measures may well reduce the costs incurred in
handling whiplash claims, will they actually address claims
frequency?
The LASPO funding reforms ought to have an impact and may well
deter some opportunistic claims but the problem is that whiplash
has become the fraud of choice being notoriously difficult to
disprove given the lack of objective clinical signs. It remains to
be seen whether the 'independent medical panels' that the
Government has mooted will be any better placed to detect
fabricated symptoms, particularly from claimants who have been
coached in advance of any medical examination as to what to
say.
The Government has indicated it is looking at tougher guidance
on diagnosis – but admits this is not
straightforward.
Do we need something radical? For example, the ABI has suggested
withholding compensation for whiplash until there is objective
evidence, but what exactly does that mean in practice?
The Government is encouraging insurers to defend whiplash claims
more vigorously. What about QOCS – will that encourage a
more vigorous defence of claims? Much will depend upon the final
wording of the reforms and whether the exceptions to the QOCS
regime, such as fraud will offer sufficient practical incentive to
invest in challenging low value claims.
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