The Whiplash Reforms - What it means for you

Reforms contained within the Civil Liability Act 2018 will be implemented with effect from 31^st May 2021. Commonly known as “The Whiplash Reforms”, they are a package of measures designed to tackle the ever-growing number and cost of Road Traffic Accident (RTA) claims, particularly whiplash, and the impact that this has on insurance costs. Within this briefing we will explain:

Whiplash

The Civil Liability Act has defined what it constitutes as a “whiplash injury”:

“Injury of soft tissue in the neck, back, or shoulder that is a sprain, tear, rupture, or an injury of soft tissue associated with a muscle, tendon or ligament in the neck, back or shoulder.”

In an effort to reduce the damages awarded for simple whiplash injuries, the reforms introduce two tariffs of fixed compensation in respect of the “pain, suffering and loss of amenity” aspect of damages (i.e. excluding things such as loss of earnings which will remain to be claimed in addition).

The lower tariff includes whiplash injuries with no psychological injuries, whilst the upper tariff includes a combined whiplash injury and minor psychological injuries:

Small Claims Track

The Small Claims Track (SCT) is the means by which the Courts deal with claims under a certain value. In the SCT, a claimant is unable to recover their legal costs from the defendant.

Therefore, in a further effort to reduce claims costs, the first major piece of the reforms increases the SCT limit to £5,000 for RTAs occurring on or after 31^st May 2021. This figure applies to the “pain, suffering and loss of amenity” element of the claim, with the overall limit for all parts of the claim remaining at £10,000.

The previous limit of £1,000 remains for RTAs occurring before 31^st May 2021 and for all Employers Liability and Public Liability injury claims.

Official Injury Claim (OIC) Portal

All injuries within the SCT will need to be submitted by the injured person and/or their representative and dealt with via the OIC Portal. If you are a defendant, your insurers will respond to the claim via the OIC Portal.

The rise of unrepresented claimants – are they on their own?

Due to the inability to recover legal costs from the defendant, it is anticipated that there will be a rise in unrepresented claimants needing to navigate the portal themselves, albeit assistance will be provided by the new Portal Support Centre.The OIC Portal allows for representation by claims management company, solicitor or other FCA-regulated representative. It is likely that in cases where a claimant is legally represented, this will have been through the proactive and prior provision of Motor Legal Expenses Insurance (see below).

Liability Agreement/Disputes

Some key changes have been made to ensure that both insurers get an adequate amount of time to investigate liability, but also ensuring that the same liability decision does not slow down the overall process:

• 30 days – insurers have been given a longer period in which to provide a decision on liability (increased from 15 days to 30 days)
• If the insurer does not make a decision within the timescale, then they are deemed to admit liability.
• Statement of truth – if liability is disputed, the denial will need to be supported by a statement of truth. The time period for which to produce this has been reduced from three months to be included in the 30-day liability decision period.

What can you do?

Assist Road Runner and your insurers to reduce third-party claims costs

This is a huge opportunity for insurers to keep injury claim costs from third parties to a minimum. You can support us with the following:

• Report claims as early as possible – we encourage roadside reporting where possible, as there is the possibility of capturing third party claims and even avoiding them submitting an injury claim at all.
• Assist in swiftly obtaining and providing statements of truth where these are required or provide access to your driver/passenger.
• Prompt provision of in-vehicle camera footage and/or telematics.
• In the event of a dispute, where insurers need to defend legal proceedings – please ensure your driver is able to attend the relevant hearing.

Motor Legal Expenses Insurance (MLEI) –

Legal representation if you or your employees are injured in an RTA

We have discussed the intended impact of these reforms – to reduce the number and cost of whiplash claims, with also the hope of discouraging fraudulent or exaggerated claims.

But what about those people who suffer a genuine whiplash injury and wish to make a claim? You will have noted from the above that the claimant is unable to recover any legal costs, which may mean for some, they do indeed have to navigate the portal and deal with third party insurers themselves as an “unrepresented claimant” or, alternatively, surrender a significant proportion of their (already reduced) damages to a claims management company or a “no win, no fee” solicitor.

Motor Legal Expenses Insurance (MLEI) is a form of Before the Event (BTE) legal expenses insurance that provides cover for legal representation if you or one of your drivers are injured in an RTA*. This means that your driver would have somebody supporting them through the process of making a personal injury claim without surrendering or affecting the level of the compensation they receive.

Be careful, not all MLEI products will automatically provide cover for claims below the £5,000 SCT limit. At Road Runner, we have access to a suite of MLEI products that, amongst the covers available, can provide cover for pursuing an injury claim against the at-fault party, irrespective of the injury value. For further information, please approach your usual Road Runner contact.

*Subject to standard policy terms and conditions.