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What is happening with the whiplash reforms?

Previously due to take effect in April, the government have once again stalled the Whiplash reforms for implementation in May 2021. But with still very little information published on how the new rules will work, can one month make enough of a difference?

Lord Chancellor and Secretary of State for Justice Robert Buckland has announced a further delay to measures under the Civil Liability Act known commonly as the “whiplash reforms”, which will now come into effect in May.

The news is welcome, if not surprising, to many in the insurance and legal industry who have been criticising the Ministry of Justice (MoJ) for a lack of clear, publicised guidance on the reforms for businesses, with such a short time left before they take effect. However, since the delay did not come with any further detail on the rules or protocols of the MoJ’s Official Injury Claim portal, it’s not clear how much benefit a one-month delay will really make to businesses.

In a written statement, Lord Chancellor Buckland emphasised the government’s eagerness to have the reforms in place, choosing to focus on the Covid pandemic as the primary reason for the delay:

“Despite the challenges the pandemic has presented, MOJ continues to work with the Civil Procedure Rules Committee to finalise the supporting rules and pre-action protocol. In addition, MOJ’s delivery partner the Motor Insurers’ Bureau continues to make excellent progress on the build of the Official Injury Claim Service.

“I do however acknowledge the challenges experienced by all this year in the face of the pandemic. I said at the time of my April statement that the Government will continue to monitor developments in relation to the current pandemic and will, if necessary, make further announcements in regard to the implementation of these important reforms. So we have listened carefully to the concerns raised by stakeholders, in particular the need for as much notice as possible to take the necessary steps in anticipation of these reforms and to prepare their businesses for the changes to how small road traffic personal injury claims are managed.

“We understand the importance of industry preparedness and, after consideration, it is for that reason we have decided to allow an additional short period of time to further accommodate this. As such, we will implement the Whiplash Reform Programme in May 2021.”

 What are the Whiplash reforms?

These reforms will raise the Small Claims Track (SCT) limit to £5,000 and set a new fixed tariff of damages for pain, suffering and loss of amenity for victims of road traffic accidents (RTAs) who suffer soft tissue injuries to the neck and/or back commonly referred to as whiplash. To manage this the government intend to bring in a new Official Injury Claim service that will be accessible to anyone, without requiring legal support.

The reforms seek to reduce the number of exaggerated or fraudulent claims, which are estimated to cost the insurance industry £2 billion per year and add an average £90 to drivers’ annual premiums according to the government, and provide a more streamlined cost effective process for those victims injured in an RTA.

However there has been increasing concern among many people in the insurance and legal sector that there is still too much work to be done in order to achieve the desired outcomes of the Civil Liability Act.. Despite the government’s assurance that a consumer portal is “progressing”, we still do not have a set of Rules and Protocol that governs how the new process will work.  This lack of preparation risks creating confusion among both legal and insurance businesses as well as the general public, causing more delays and service issues for victims of injuries.

The problem for business

The nature of the reforms will require personal injury firms and insurers alike to adjust their systems and provide appropriate training to their staff to be able to direct RTA victims to the most beneficial service (i.e. should it be handled by a legal team or by the Official Injury Claim portal?). But they can’t do so without knowing how the Official Injury Claim portal will work. The longer they have to wait for the relevant information, the more difficult it will be to adjust and test these systems in time, straining their services and creating potential delays and problems for their clients.

Zurich Insurance recently highlighted the industry’s concerns shortly before the latest delay, when they called on the government for more clarity and swifter progress:

“It is absolutely critical that when the new process is introduced, it must work fast and seamlessly for unrepresented claimants. If it doesn’t, there is a danger of driving these people into the hands of claims management companies who will take a cut of the pay-out,” said Calum McPhail, Zurich’s head of liability claims.

“The government must ensure that the reforms are introduced alongside a straightforward mechanism to resolve disputes to free up court time and, ultimately, reduce the time taken to resolve disputes and settle claims.”

It’s vital for businesses to be able to provide the best possible advice for their clients and customers. But with so much left to be resolved, is it best to push through the plans for reform quickly, or spend more time getting them right?

Matthew Maxwell Scott, director of ASCO warned against pushing the reforms through just to meet a proposed date. In the organisation’s view, if the Official Injury Claim service portal is not proven (through independent testing) to be effective and its availability properly promoted among the general public then “the likely chaos could add to the courts backlog and create an entirely avoidable civil-justice headache.”

The problem for claimants

The introduction of the reforms does not just affect the businesses who currently deal with small claims RTAs, but will also impact potential claimants. The general public will need to be aware of the introduction of the reforms and the availability of the Official Injury Claim portal. There is a great need over the next few months for this to be publicised heavily so that anyone injured from the start date understands what to do.

But so far there has been very little publicity. It can’t be said that the average person is aware of the reforms or the pending availability of the portal. What then will they do if faced with an injury? Will they know if their case should fall under the Official Injury Claim service, or will they add to a growing backlog of cases that should no longer fall under the remit of personal injury firms? Rather than improving things for injury victims, it could actually take them longer to get their case dealt with.

As Zurich pointed out, people may be driven to other solutions simply out of a perceived ease or to get a quicker payout – even if that solution does not provide them with the full amount they are entitled to.

Alternative dispute resolution (ADR) also raises issues. In March last year the government revealed that they had “no practicable solution for ADR”; this is simply not acceptable. With common issues of liability and quantum, an effective ADR process is essential to provide equality of arms and prevent added pressure on an already stretched legal system.

Will there be another delay?

These reforms to how low value RTAs will be dealt with have now been pushed back several times. Both last year and in the most recent delay, the MoJ focused their reasoning on the impact of the Covid pandemic.

“It is apparent that the current Covid-19 pandemic has had an unprecedented impact on the medical, legal and insurance sectors. While the whiplash reform measures remain important, the government is committed to acting to ease the disruption and pressures caused by the Covid-19 outbreak where it can,” the MoJ said in a statement last August.

“[Delay] will enable key sectors of this country’s business to focus their energies on delivering their response to Covid-19, and will allow the government to focus on delivering key services in the justice area during this difficult time.”

Clearly the circumstances remain just as disruptive now as they did last year, which once again raises the question of why a delay of only one month has been added. Though we may be looking at an easing of pressure by May, as we have seen above there are still many concerns about the amount of work left to be done.

Ultimately the question must come down to the end user: those who are victims of road traffic accidents and injury. The most important thing is that the injured party has ready access to justice and is able to secure the best outcome for their circumstances. But no-one wins from a poorly understood set of reforms that at present leaves more questions than answers.  No-one wins from an untested and unworkable portal that can’t deliver its core service. And no-one wins from a lack of guidance that leaves injured parties confused and unsure of where they should turn.

If the government is not confident that these reforms can be implemented in just three months’ time, then can we really expect just one extra month to make the difference. Because if the necessary infrastructure and publicity can’t be put in place effectively by May, then another delay will be the only course.

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