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Main themes at the Transport Select Committee: 17 June 2013

The opportunity came yesterday for insurers, lawyers and claims management companies to set out their positions on the current whiplash debate before the Transport Select Committee. The Committee, it will be recalled, is considering whether the UK has a whiplash problem, and if so what should be done about it. 

Background

Most of the themes already running in this debate were aired again yesterday, and the views expressed mainly set out established positions, but views in some areas were developed further than they have been previously. It was a chance for representatives of claimant lawyers to be asked for their views again having of course been excluded from some of the MoJ's recent discussions with other interested bodies around portal and costs reform, and having failed with their judicial review when challenging that position. The Committee yesterday made it clear that this was a chance for claimants to set out their positions.

The problem of fraud within whiplash claims

Views were polarised in this area. Insurers spoke of 7% of whiplash claims being known to be fraudulent, but that if exaggeration was included, the figure could be 60% or even more. The claimants saw the statistics as unreliable, suggested that they were in line with other major Western European states, and denied that the UK was "the whiplash capital of Europe". It seemed clear that the Committee saw the number of fraudulent or exaggerated whiplash claims as a significant one, they seemed surprised at the increasing number of whiplash claims against a report of falling number of accidents, and were clearly unwilling to accept the suggestion from MASS that the fact that more traffic might travel at lower speeds on UK roads as opposed to elsewhere in Europe was likely to be a relevant factor.

The quality of medical evidence in whiplash claims

The insurers set out their views that the medical experts currently used in whiplash cases were not adequately independent, and they favoured a new scheme along the lines of the Government's proposals in the whiplash consultation, involving accreditation, training and peer review. They saw a need for any medical evidence in this type of claim to be based on all of the evidence available including the defendant's account of events. They also saw merit in having a minimum vehicle speed before whiplash could be diagnosed.

The claimants' views varied between their spokesmen, but ultimately there was an acceptance that a rounded view of all of the evidence available in a case was needed, and that there was a recognition that at present diagnoses were given based solely on the claimants' evidence. Claimants were opposed to having a minimum speed threshold, arguing that even a collision with four or five miles per hour was enough to cause whiplash in some claimants.

Small claims track limit

There was a wide variation of views between the sides to the debate. Insurers who spoke were in favour of the SCT limit being increased quite considerably, in an attempt to remove claimants' costs as the fuel which drove claims numbers. They saw there to be no need for lawyers in all cases, that software should be introduced to value PSLA, and that where lawyers were involved DBAs could be used, but if claimants decided to advance claims themselves, they could expect to be given access to the portal.

Claimants argued that any increase in the SCT limit would be deeply discriminatory of the old and the unfit who it seemed to be said would be more likely to develop whiplash type injuries. The claimants saw the likelihood of a new market developing to handle those types of claims even if the limit was increased, so that those claims would not go away, but a view was expressed that claimants' solicitors would be unlikely to be willing to take on a £2,500 whiplash claim on a DBA as the contingency fee would be insufficient for the work involved.

Andy Wigmore, policy director of the Clams Standards Council was vocal in cautioning against any increase in the SCT limit, saying that the claims would not go away but instead the whole cycle would start again of working out how those types of claims could be profitably handled. "Everyone will become a claims management company" he advised, and that there would be a reinvention of new marketing companies. He strongly advised the Committee that a watching brief should be kept following the introduction of the current reforms before additional measures were considered.

Reduced insurance premiums

The insurers reaffirmed their categorical commitment to a reduction, and agreed to write to the Committee to explain how they calculated that of an average £440 motor premium, £90 could be attributed to the cost of fraudulent claims. Claimants continue to be doubtful that the reduced costs in the system brought about by the current reforms would be passed on, and were in favour of capping insurers' advertising costs that would otherwise be incurred so keeping premiums high, complaining that consumers were "besieged with adverts" from insurers.

Judicial changes

The insurers wanted the courts to be stronger on fraud and did not see the result of Summers v Fairclough Homes as adequate, preferring instead that if part of the claim was tainted by fraud, or the whole claim was exaggerated, that the claim should fail. The claimants on the other hand identified no specific area from the court process that they saw as requiring change.

Conclusion

The Select Committee will continue its work. It is difficult to predict outcomes but in relation to this area of potential further reform, both in relation to whiplash specifically, and to SCT limit issues beyond that, the claimant side may think that at least its voice has a forum in which it can be heard this time. The Committee has of course a political balance, and while its conclusions will therefore be difficult to predict, they are likely to be influential on the line taken by Government in this area.

The insurance industry were represented before the Select Committee by James Dalton of the ABI, Dominic Claydon of Aviva, David Fisher of AXA Insurance and Steve Maddock of Direct Line Group. The claimant lawyers were Desmond Hudson of The Law Society, Andrew Ritchie QC of PIBA, Matthew Stockwell of APIL and Craig Budsworth of MASS. Nigel Teasdale, the DWF Head of Motor was the FOIL representative before the Committee. Also appearing were Andy Wigmore of the Claims Standards Council, Russell Atkinson of National Accident Helpline, and Peter Gradwell of Exchange Insurance Services.

For further information please contact Simon Denyer, Partner on 0161 604 1551 or email simon.denyer@dwf.co.uk

By Simon Denyer

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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