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  • Writer's pictureRichard Moon

Big Fall in Personal Injury Claim Numbers

The number of claims for compensation for personal injury in this country has fallen sharply, even before the introduction of rules designed to make claims more difficult.

From 31 May 2021, new rules brought in by the government meant people hurt in road traffic accidents (RTAs) in most cases where the compensation is less than £5,000, were encouraged to make their claims direct to the insurer of the motorist who injured them, without using solicitors. To do so, they could no longer recover a contribution towards their solicitor's fees from the insurers. Claims under £5,000 represents a substantial majority of road accident claims. Compensation for whiplash was also singled out to be sharply reduced, so it is no longer compensated for in the same was as other injuries.

The Lord Chancellor, Robert Buckland, said, "For too long the system for making whiplash claims has been open to abuse by individuals looking for an easy payday – with ordinary motorists paying the price. Our changes, which come into force today, will put an end to this greedy opportunism and ultimately see savings put back into the pockets of the country’s drivers."

Whether it is "abuse" of the system simply to make a claim for whiplash is not necessarily something that stands up to scrutiny. Inflicting an injury by careless driving that causes someone else months or years of pain seems the greater of the two evils.

The suggestion that the issue is people inventing claims is despite the fact that this "easy payday" requires people to convince a solicitor to take on their case where that solicitor won't get paid if they lose; to go to a medical professional trained in what whiplash looks like and what it doesn't look like and convince them they have a proper injury; to have their claim scrutinised by a generally hostile insurance claims handler; and ultimately to stand up in court in front of a judge and answer questions from the insurer's barrister, who wants to convince the judge that the claimant is a liar.

There are easier paydays.

A lot of the publicity surrounding whiplash cases has come from insurers' press releases to newspapers keen to publish stories to provoke outrage at a "broken system". Often claimant lawyers are in their sights, seen as encouraging meritless claims with no win no fee agreements. Claimants are seen as having nothing to lose.

But under a no win no fee agreement, the solicitor gets no fee if the injured person loses. Why would a solicitor take on a bogus claimant, who is by definition more likely to lose than a genuine one?

And the newly-released figures on claim numbers are also telling. They are very much the gold standard in terms of assessing how many personal injury claims are being made. They come from the Compensation Recovery Unit of the Department for Work and Pensions, with whom all claims are registered when they are notified to the defendant's insurer. They have been published since 2000, which by coincidence is when no win no fee agreements first started to be used in any significant numbers by personal injury solicitors.

Looking at the figures, despite the supposedly easy money to be made from no win no fee agreements by solicitors, claims for non-road traffic accident claims have remained remarkably constant. By contrast, claims for road accidents (including whiplash claims) rose, but only from about 2005. If it was all down to people making up dodgy claims, backed by unscrupulous no win no fee lawyers, why didn't numbers take off in 2000? And why have number for non-road accidents, also predominantly run under no win no fee agreements, never take off?

The answer is, and always has been, that the real reason for the increase in road accident claims from the mid-2000s was that it was driven by the insurers themselves. When someone has a car crash, one of the first things they do is report it to their insurer. In the mid-2000s, a change in the law allowed insurers to make money from referral fees, where they are paid some money by a solicitor's firm for sending a case to them. This led to insurers (and in some cases vehicle repair garages) routinely sending the details of their policyholders to solicitors who then offered to make a personal injury claim for them. It was the start of personal injury cold calling, and in one form or another insurers encouraging people to make claims has continued right up to the present day.

So the problem has never really been a dodgy whiplash epidemic. More people were being encouraged to make claims where otherwise they might not have, but reluctant claimants are not the same as bogus claimants.

But what if the real problem is that claims are not bogus, there are just too many of them, and that this is increasing motor insurance premiums? It is certainly a shift to say not that these are fake claims, but that people with genuine injuries caused by careless drivers just shouldn't get compensation.

But the figures go up to March 2021, two months before the recent reforms came into force. Claim numbers are already nosediving. Fewer claims were made last year than any other year on record. How much further do they need to fall before the insurers and their allies in government are happy?

Should nobody be making claims at all, and instead either take all the pain, sick leave, sometimes unemployment, often times significant loss of income, all in their stride? Should they look to the state and claim benefits instead, shifting the burden from the insurers onto the taxpayer?

By the way, as well as being a register of the number of claims, the CRU is responsible for recovering money spent by the NHS on medical treatment to accident victims from the insurers of those who caused the accident, whenever the victim claims compensation. Last year it recovered just under £130m for the taxpayer. As fewer claims are made, so less money will be recovered for the NHS.

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