The top 10 priorities for the new Cabinet
Following a turbulent couple of months, MPs and Members of the new Cabinet have returned to their constituencies, after Parliament rose this week for Summer Recess. Nigel Teasdale looks at 10 key priorities for insurers that will require the new Cabinet’s attention when Parliament reconvenes.
Autumn Statement reforms – after careful thought within government, plans were already in place before the referendum to bring forward a consultation setting out the detail behind the proposed removal of the entitlement to general damages in minor whiplash claims and the increase in the small claims track limit to £5,000. The compensation culture and market conditions which led the government to policy decisions in this area remain as strong as before: our advice is to proceed on the current template with realistic proposals as soon as possible in order that implementation is achievable, not unnecessarily delayed and savings can be delivered to customers.
Extension of fixed costs – the financial imperative created by disproportionate levels of costs in claims faced by the NHS remains, though the issue is in fact wider and covers litigation in all sectors. Our advice would be to bring forward the proposed consultation as soon as possible so that litigants have the benefit of the certainty of fixed costs, so that realistic plans are in place to cover all types of litigation with a value of up to £100,000, with a view to implementation early in 2017.
MedCo - government support should continue for the strengthening of MedCo as a key initiator in the prevention of abuses in the obtaining of medical evidence in soft tissue injury claims. Following the measures already introduced by MedCo, the improving quality and resilience of medical evidence remains an essential factor in the ongoing reform of whiplash claims. Continued government support will allow MedCo to become fit for purpose and will enable its scope to be potentially widened to include other types of claim such as industrial deafness and also in relation to rehabilitation.
Claims Management Company behaviours –CMC claims-generating activities are one of the primary reasons for high levels of claims for whiplash and for industrial deafness in particular. We would advise the government to introduce not only fee capping measures for CMCs in personal injury claims, but also to bring forward as soon as possible the necessary legislation to transfer CMC regulation to the FCA and strengthen the overall regulatory regime for CMCs
Insurance Fraud Taskforce report – following the acceptance by both the Treasury and the MoJ of the recommendations of the IFT report, we would now urge government to meet its commitment to set out how it intends to respond to the report’s recommendations requiring action on its own part. The Government also has an important role to playin actively monitoring the progress of other parties against recommendations requiring action of them, in order that control can be achieved both over the problem of ongoing substantial claims farming activities, as well as in the ongoing battle against fraud.
Noise Induced Hearing Loss (NIHL) claims – the final report from the Civil Justice Council Working Party on Noise Induced Hearing Loss claims is expected in the autumn. We would advise government to look seriously at its recommendations with a view to establishing workable and cost effective processes for handling NIHL claims and introduce fixed costs for NIHL claims to help tackle their spiralling cost.
Mesothelioma claims - We would also propose that the time is now right to bring forward a further review of mesothelioma claims with a view to ending the recoverability of success fees and ATE premiums in those claims which will at last both limit legal costs and allow those claimants to receive an additional 10% by way of general damages.
Court funding and court fees – the government has committed £700m to fully digitise the courts, a commitment which it will need to follow through in order to create a 21st century justice system in which the Online Court can be a part, as has been recommended by Lord Justice Briggs in his recent report. On court fees, the government will need to consider its response to the recent Justice Committee report: our advice is that it should recognise the significant additional burdens caused by the enhanced fees introduced in 2015 on litigants, including insurers, who fund the payment of those fees in successful claims, and should now carry out the overdue review of those effects, with a view to limiting the extent to which litigants can fairly be expected to subsidise the court service.
Vnuk – prior to the referendum, the European Commission’s roadmap had proposed, amongst other options, an amendment to the Motor Insurance Directive to limit the impact of the Vnuk decision and to make it clear that the compulsory obligation to insure would be limited to when vehicles were “in traffic”. It is understood that a wider REFIT review is due to take place in the third quarter of 2016. While the UK remains an EU member then it should comply with the Motor Insurance Directive. At present, the Road Traffic Act does not comply and the UK Government remains susceptible to Francovich damages claims. It would assist the UK if the proposed changes were brought forward speedily so that the UK’s position could then be fully assessed.
Autonomous vehicles – the Department for Transport have recently issued a consultation on a reform package affecting RTA insurance which would permit cover for automated vehicles. As this technology develops, we would advise government to continue to work with insurers to jointly tackle challenges arising from this important technological change. We would expect government to recognise the need to update the Road Traffic Act in due course in response to the expected increase in the use of autonomous vehicles and ensure that insurers have access to the appropriate data to both write policies and settle claims.
For further information please contact Nigel Teasdale, Partner, on +44 (0)1772 554264.
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.