Posted 05 September 2018 by Christina Hughes
The Civil Liability Bill was debated as part of its second reading in the House of Commons last night. The Justice Secretary, David Gauke, introduced a number of amendments to the Bill in advance of the debate.
1. The Bill and the associated increase in the small claims limit will not apply to “vulnerable“ road users. Vulnerable in this context means road users who are vulnerable to injury (such as pedestrians, cyclists, motorcycles and horse riders), as opposed to vulnerable individuals such as children and protected parties. These vulnerable road users will be excluded from the increase in the small claims limit for RTA claims.
2. The Government intends to “hold insurers feet to the fire” and amend the bill to introduce a mechanism to ensure that claims savings are passed to consumers by way of reduced premiums. The suggestion appears to be that insurers will be required to publish information in relation to costs savings, in order that they may be held to account, as opposed to any form of regulation – for example by the FCA.
3. The Bill will be amended to ensure that the Lord Chancellor consults with the Lord Chief Justice when setting the tariff and that the tariff will be reviewed every three years. There is clearly, therefore, a possibility that the current tariff amounts may change.
4. It was confirmed, in the context of pre-medical offers, that there will be a requirement for the medical report to be produced following a face-to-face examination - ruling out the possibility of telephone or Skype assessments.
5. In relation to the Discount Rate, there has been demand for an increased use of Periodical Payment Orders, and the Secretary of State has written to the Master of the Roles in an effort to ensure that PPOs are used more frequently.
David Gauke also confirmed that the Government is confident that the Litigant-in- person portal can be built in time for implementation in April 2020. The debate was split along party lines, as would be expected, save that Bob Neill – Chair of the Justice Select Committee – was more in line with the Opposition. Alberto Costa (Con) joined Bob Neill in expressing reservations about the Bill There was much talk from the Conservative benches of personal experience of cold calling. There was a focus on how whiplash claims are closely associated with fraud, and how there was a higher incidence of whiplash claims in the UK in comparison to other jurisdictions – demonstrating that whiplash claims are frequently not genuine.
Opposition MPs argued that one of the problems with cold calling was that data was sold in the first place and that insurers continue to profit from claims in part by establishing Alternative Business Structures. Rory Stewart (Justice Minister) said that he could not understand the paradox suggested by the opposition, being that insurers both want to reduce injury claims while at the same time profiting from them. Chris Philp, on the Conservative side, suggested that insurers should be banned from owning or part owning law firms.
The Bill was supported on the basis that it protected consumers from increased motor premiums, while at the same time ensuring that genuinely injured claimants would continue to be compensated and that serious injury claims would reflect realistic investment rates.
The Opposition suggested that the only beneficiaries of the Bill would be insurers and that fraud was overstated. While fraud should be addressed, the current measures attempted to do so at the expense of the vast majority of claimants who are genuine. The figures in the tariffs were said to be arbitrary and should be determined by the judiciary. The increase in the small claims limit was also arbitrary and meant that many people whose lives were affected by genuine injuries will be kept out of compensation without representation.
The “paradox” that Rory Stewart was concerned about was explained because insurers want to reduce their spend on claims faced, and maximise their income on non-fault cases.
Concern was expressed about Employers Liability claims. These were said to be more complex than motor claims, and Union surveys suggested that two-thirds of individuals would not pursue claims without assistance. The changes were being introduced despite there being no evidence of EL claims involving whiplash or fraud.
There was said to be no basis in logic for the same injury attracting a different award and different entitlement to legal costs, depending upon how it was sustained.
Different statistics were presented. The Conservatives suggested that claims have increased either 40% or 50% despite a fall in the number of road accidents, which must demonstrate an element of fraud. The Opposition suggested that the number of injury claims has in fact reduced, and that identified fraud on the ABI’s own figures represented only 0.17% of claims. The introduction of LASPO has led to a saving for insurers of between £8 billion and £11 billion, which has not been passed on to the consumer. Motor premiums over the same period were said to have increased by 17%. In contrast, David Gauke said that premiums had reduced by 50% following LASPO.
He also said that the current Discount Rate was leading to overcompensation, and particularly to increased costs on the NHS. Work on reviewing the rate would get under the new mechanism as soon as the Bill receives Royal assent.
The Shadow Justice Secretary, Gloria De Piero, said that the Labour Party would be abstaining on the vote on the second reading, but unless the bill was withdrawn or significantly amended at the Committee stage, they will vote against it at the third reading.
Our expectation is that the Bill will move swiftly to Committee, perhaps as early as next week, and receive Royal Assent before Christmas - quite possibly in November.