1. What is the current process?
When someone is injured in a road traffic accident (RTA) that wasn’t their fault, they would normally call their insurer to report the accident and their injuries. The injured person would then call on a legal services provider to help them manage their personal injury claim against the at fault party. Many customers today receive this legal support through their Legal Expense Insurance (LEI).
Often the customer will receive physiotherapy or other assistance to help their recovery. Contact would be made with the third-party’s insurer to determine liability and they may also see a clinician and obtain a medical report into the extent of their injury.
Evidence would be gathered by the injured person’s legal representative and compensation would be calculated. This would be based on case law, personal injury guidelines and the representative’s own experience in dealing with similar claims. The validation and valuation of other losses (such as vehicle hire while their own car is repaired) the customer can claim for are also completed by the representative.
Once valued, the evidence would be sent over to the at fault party, and negotiations would begin to agree suitable damages. The legal expert has an important role, both to help guide the injured party through sometimes complex procedures, and to ensure the right settlement is achieved with the at fault insurer. Typically, the legal advisor’s fees are paid by the at fault insurer (where the claimant has legal expenses insurance cover in place).
1. What happens in 2020?
The Civil Liability Act will, according to ministers, reduces the cost of motor insurance by reducing the volume of fraudulent claims. This will mean claimants will not be able to recoup their legal costs for claims with an injury value of less than £5,000 (currently £1,000). Injured people who are wishing to bring a claim will have to either fund their own legal support or choose to become a litigant in person.
The Act also introduces a tariff system for pain, suffering and loss of amenity compensation for soft tissue / whiplash injuries with a prognosis of 2 years or below. The tariff system will be based on the how long the injury lasts. The amount of compensation within the tariff is still to be decided.
To put this change into perspective, around 90% of personal injury claims will fall within the new Small Claims Limit (£5k) for which legal costs will now become non-recoverable from the third-party insurer.
From next year, customers making a claim for minor injuries will instead be required to use a new portal which is being developed by the Motor Insurance Bureau (MIB) and paid for by the insurance industry. The go live date for the changes (and the portal) is planned in April 2020 after testing the portal in October 2019.
2. What do the changes mean?
With legal costs under £5,000 no longer recoverable, customers who have claims falling under this value will need to make different choices about how they progress their claim for personal injury. Customers will have limited access to legal representation unless they have legal expenses insurance or are willing to pay for the cost of hiring a lawyer themselves. For most ordinary people, the latter is unlikely given the cost and effort of making a claim that will bring little return under the set tariff system.
Vulnerable road users are exempt from some of the changes and this includes cyclists, motorcyclists, horse riders and pedestrians. Children and protected parties are also exempt from the process for the time being. However, this may change as the MIB chose only to exclude these cases as they tend to be more complex, and the designers of the portal are focused on delivering what is known as a ‘minimum viable product’ capable of dealing with simple cases only.
The online portal will require a lot more effort from customers representing themselves as they will need to understand their responsibilities under the law and facilitate the gathering of all evidence, including witness statements and police reports. Ministers say there will be help provided, as well as facilities for customers who do not have internet access, or have other difficulties preventing them from accessing the portal. The contact centre to manage customer queries is likely to be busy, especially in the early days.
3. How will reforms impact the customer?
Independent research conducted by Minster Law shows that while 50% of the public prefer to settle their claim online, 45% would still prefer to deal with a human with no IT involved whatsoever, even if their claim takes longer. This suggests that there is no universal support for an entirely digital process, or at least for many people a human element is integral to the claims journey.
It has been confirmed that insurers will pay for the medical report if liability is admitted but it is not certain who will bear the cost if claims are disputed or what will happen if the customer is unhappy with the report.
Minster Law’s research found that 44% of people making a claim said that simplicity was important. But despite the laudable aim of simplifying the claims process with the portal, there will be obstacles and barriers for customers using it. The danger is that without assistance, customers may well disengage and fall out of the system, with a negative impact on access to justice.
Minster Law will continue to support injured customers who want to claim for compensation and we have been keen to ensure the needs of injured customers are at the heart of this complex change. In seeking to achieve the right customer outcomes, Minster Law has conducted research, debated the issues with insurers, the MIB, defendant law firms and customers themselves to find the best solutions.
In setting out the case for the new portal, the minister said: ‘they will ‘ensure that the system really works and that we have tested it again and again before rolling it out, because otherwise a system designed to increase access to justice may inadvertently decrease that access through the malfunctioning of the online portal.’
Minster Law supports this aspiration, but argues that, for the portal to be a success, it must deliver a better customer journey than the present process achieves.
What progress has been made so far?
1. The latest
There has been limited information from both the MoJ and the MIB to date. In July we received the first real communication of what is being built within the portal to facilitate these claims.
If a customer is unrepresented and they are unable to reach a settlement agreement with the at fault party, they will have access to Alternative Dispute Resolution (‘ADR’). This is an online service designed to help parties come to an agreement.
Proponents believe the changes will speed up the claims journey as there will be less time spent on technical costs arguments. Customers will have greater clarity over the settlement figure they will get in hand as there will be a fixed tariff system, and no costs will apply on cases under £5,000.
The party at fault (the third-party insurer) will cover the cost of the medical report (currently priced at £216). However, this would only be for cases where liability is admitted. Read our latest updates from the bulletins below