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  • Writer's pictureRichard Moon

Reforms to lower value claims delayed again

The government has announced that changes to the compensation system for lower value personal injury claims is to be delayed again.

The reforms would have seen heavy reductions to levels of compensation for whiplash claims, and the removal of the right to claim the cost of using a solicitor in all lower value cases.

The changes were originally scheduled for April 2020, but were put back to August because the rules to cover the claims were published too late, and the software and procedures to be used in an online 'portal' to handle claims was unlikely to be ready. Now they have been delayed again due to the disruption to government caused by the Coronavirus crisis.

This is good news for injured people, if only a temporary reprieve. Insurers, who pay injury compensation, have lobbied government for years to try to bring down the level of claims being made. The current government is receptive to that campaigning. It is likely that once the reforms come in, they will bring down insurers' compensation bills simply by meaning that injured people are far less able to bring claims at all. Whilst insurers and government say that the aim is to tackle fraudulent claims and the 'compensation culture', the reforms will do so by reducing the level of all claims, good and bad.

At the moment, for all personal injury claims worth under £25,000 damages are assessed in the traditional way by judges, and almost all claims settle out of court. Since 2013 the legal costs payable by insurers to injured people to pay their solicitors' fees have been fixed at very low levels, and are designed to ensure that injured people pay at least something towards their legal bill.

The proposed reforms would mean insurers would pay no legal costs at all (except for expenses like medical report fees and court fees) in road accident cases worth under £5,000. This would mean none of an injured person's solicitor's fees would be covered in road accident cases, except those pursued by pedestrians, cyclists and horse riders.

The result is that an accident victim who, remember, did not ask to be an accident victim and isn't pursuing a claim for fun, has the choice of either pursuing the claim themselves against an insurer who has no obligation to help them to make the claim or to value their damages appropriately; or using a solicitor and having to pay for them out of the compensation that is supposed to be there to compensate them for their injury and losses.

And before you start thinking that paying a bit out of the damages doesn't sound so bad, the other limb of the reform is to rewrite the rule book on damages for whiplash-type injuries, which is a big part of road traffic accident injuries. Claims that are currently worth a few thousand pounds will be changed to be worth a few hundred. There is a point at which a solicitor is going to have to tell a client that although they have a perfectly good claim and an unpleasant injury, it is just not worth paying for a solicitor given the likely damages they will get out of it.

It is likely that many claimants, faced with trying either to be their own lawyer or paying out a large chunk of their damages on legal fees will take the third option, that of just not bothering. For the insurance companies, that is probably the point.

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