Posted 26 October 2016 by Eve Pybis
Insurers are being urged to talk more with claimaint solicitors ahead of the introduction of the government’s proposed whiplash reforms.
At a recent Insurance Times roundtable on the upcoming reforms the Ministry of Justice’s head of civil litigation funding and costs Robert Wright said there is ignorance on both sides of the debate.
“Decent people on each side have more in common than they realise,” he added.
During the meeting which was co-chaired by law firm Carpenters partner Donna Scully, insurance claims chiefs, government officials and insurance trade bodies, thrashed out their expectations from the government’s whiplash reforms.
The proposed reforms, unveiled in last year’s Autumn Statement, include replacing cash compensation with treatment for minor soft-tissue injuries and increasing the threshold for claims that can be
dealt with by the Small Claims Court to £5,000 from £1,000. Top insurance bosses said customers wanted the whiplash reforms to be pushed through because they did not want to continue paying higher
Scully said she understood why the whiplash reforms were being called for. But she warned that without safeguards innocent claimants would lose their protection, particularly where the small claims limit for minor tissue injuries was also increased.
Additionally, she added the reforms failed to tackle other unregulated sectors in the motor market, such as credit hire, which could still drive up the cost of whiplash claims.
Scully said: “What is the point of doing this and saying it is for the better of society if we still end up disenfranchising people? And then all of a sudden we end up with a MedCo situation or we have
more claims, cold calling, and contingency fees.
But insurers insisted that the whiplash reforms would benefit customers. First of all, they said, it will reduce premiums.
Covea Insurance claims director Adrian Furness said: “Ten years ago the customer did not think premiums were that much. They might have heard their mate had made a whiplash claim for £2,000 and said, ‘I’ll do it’. That has now changed. Customers do not want to pay the premium. “Insurers are committed to premiums going down. That should be accepted now.”
Allianz head of motor claims Tony Newman added: “The reforms are the only solution if you want to bring down the cost of motor insurance. We have reached a point where the culture of, ‘where there is blame, there is a claim’, is so ingrained.” Secondly, removing the cash incentive associated with whiplash claims will dissuade the majority of claims management companies from trying to take control of the claim before the insurer.
Furness said: “The worst customer journey for my customers are when they do not come to us, because there is a financial incentive for someone to intervene. “If you remove that financial incentive the customer will come to the insurer first and that’s at the heart of the reforms.”
Removing the cash element will help insurers focus on treating their injured clients, rather than just handing out cash. Insurance bosses said upping the small claims limit would also allow the customer to keep 100% of the claim.
They admitted that it might cost more to hire additional staff to assist non fault or third parties but they added that overall it would still be cheaper than the overall cost of whiplash.
The reforms were expected to the announced in the summer but Brexit is understood to have pushed this back.
Along with the regulation of CMCs by the FCA it is expected that spurious claims would be further driven down.
One big area that has yet to be tackled properly is credit hire. But insurers at the roundtable were hopeful that the reforms would eliminate the more extreme credit hires costs.
The delegates also stressed that the whiplash reforms would be more effective alongside improvements to the MedCo framework and the industry’s data strategy.