Government's response on the small claims limit
Tuesday 22nd December, 2015
The Government has responded to the petition you signed – “Keep the small claims track limit for personal injury claims at £1,000.00”.
Government responded:
The Government is concerned about the number of whiplash claims and the impact on premiums. Therefore we announced new measures to control costs, including raising the small claims limit to £5,000.
Raising the personal injury small claims limit will remove the ability of the claimant to recover legal costs associated with such claims by transferring them to the small claims court. The personal injury small claims limit has been set at £1,000 for nearly 25 years and the Government believes it is both justifiable and proportionate to increase the limit to £5,000.
How can it be justifiable to allow innocent victims to fight multinational insurance companies to recover compensation?
Damages certainly haven't gone up by 500% over the same period.
In addition, the reforms will remove the right to claim for damages for pain, suffering and loss of amenity for minor whiplash injuries. However, people who suffer more serious injuries will continue to be entitled to such compensation. Compensation for other areas of loss such as the costs of medical treatment or for loss of earnings will remain available to all claimants.
They will also remove the ability of the DWP and NHS to recover their costs relating to innocent victims including treatment costs and benefits received due to loss of work and sickness.
These reforms will end the cycle in which innocent car owners pay higher premiums to cover false or unnecessary claims by others and the Government expects insurers to pass savings of £40-£50 per average motor insurance policy on to consumers. Two companies have already said publicly that they will pass all the savings back to consumers.
Why only 2 companies – surely they should all be making cast iron guarantees to allow such a sea change to be implemented.
What is the Goverment getting in return other than an 'expectation' of the insurers when they are prepared to allow further financial pressur and strain on services like the already overstretched NHS.
The Government will consult on the detail of the proposals early in 2016 including on any safeguards considered necessary. A detailed impact assessment will be published alongside the consultation.
What form will the consultation take? Previous consultations involved meetings with insurers behind closed doors without representation from Claimant groups.
Figures
The number of reported road traffic accidents has fallen from approximately 190,000 in 2006 to around 146,000 in 2014(1)(a reduction of over 20%). However, at the same time, the number of road traffic personal injury claims has risen from around 520,000 in 2006/07 to 760,000 in 2014/15(2)(an increase of around 50%).
These are the figures for Personal injury road traffic accidents reported to the police, including serious injuries.
Road traffic personal injury claims recorded with CRU has fallen from 790,999 to 761,878 in the last 4 years
Background
The Government is determined to crack down on false or unnecessary personal injury claims and the compensation culture. The overall costs of these claims far outweigh the value to genuine claimants of relatively small amounts of compensation.
How a claim for an injury be unnecessary?
Where is the evidence of a Compensation Culture?
Overall costs have been fixed! Who knows the value of these claim to genuine claimants who endure months of pain and suffering and for whome between £1,000 and £5,000 is a significant amount of money.
In April 2013 the Government implemented significant reforms to control the costs of civil litigation through provisions in the Legal Aid, Sentencing and Punishment of Offenders Act 2012. This reduced the costs of litigation whilst enabling appropriate cases to be pursued.
Continuing concerns relating to the number and cost of whiplash claims and the impact they were having on the price of motor insurance premiums led to a further phase of reform. On 1 October 2014 the Government reduced and fixed the cost of initial whiplash medical reports, introduced an expectation that there will be a single report and banned experts who write the reports from also treating the claimants.
Why have these savings not been passed on to consumers?
Further changes meant that from 6 April 2015, solicitors, medical experts and medical reporting organisations must use, and be registered on, the new MedCo Portal. The new system brings greater independence and breaks the financial links between the solicitors who commission medical reports and the medical experts and organisations who provide them.
Medical experts have always had a duty to the Court this will not change whether or not the small claims limit changes.
In addition, from 1 June 2015 claimant lawyers must undertake a ‘previous claims’ check on clients before accepting a claim; and from early 2016 a robust new accreditation scheme for medical experts will be introduced which means that any experts must be accredited with MedCo or they will be removed from the system.
Why have these changes not been allowed to take effect before there is more talk of change?
Changes to the small claims limit
When considering whether a case is suitable for allocation to the small claims track, the court will take into account a number of factors, the main one being the financial value of the case. Generally, the small claims track is for claims with a financial value of not more than £10,000, but not for personal injury claims and housing disrepair claims where the limit is set at £1,000. Claims above these limits are generally dealt with in the fast-track if valued up to £25,000 and the multi-track if they are above £25,000. The main difference between the small claims track and the fast-track is that in the small claims track their own costs are generally borne by each side, whereas legal costs are generally recoverable by the winning party in the fast-track.
Meaning innocent victims will no longer pursue genuine claims because they are unable to fight the representative’s of multinational insurance companies alternatively they will look to unscrupulous, unqualified and unregulated Claims Management Companies who owe no duties to the Courts.
Claimants are not precluded from engaging legal representation, but the small claims track is intended for cases which could be brought without lawyers. However, the £1,000 limit for personal injury cases in the small claims track was set in 1991 and has not been changed for nearly 25 years, so a revision is long overdue. The Government will launch a consultation in the New Year on the detail of this and the measure to remove general damages for low level whiplash claims.
Insurers will still instruct lawyers?
Most minor injury cases are straightforward enough to be brought without the need for legal representation, making them suitable for consideration in the small claims track.
Minor injury cases still require expert medical evidence, possibly expert engineering evidence, possibly liability evidence and if such cases are conducted by litigants in person or unqualified representatives, the Courts will be clogged up with unnecessarily lengthy hearings and satellite litigation.
How can a member of the public expect to be aware of all the laws and case law which determines the outcome of claims?
Ministry of Justice
(1)https://www.gov.uk/government/statistics/reported-road-casualties-in-great-britain-main-results-2014
(2)www.gov.uk/government/uploads/system/uploads/attachment_data/file/424356/cases-registered-cru-2014-15.csv/preview
Click this link to view the response online:
https://petition.parliament.uk/petitions/113810?reveal_response=yes
The Petitions Committee will take a look at this petition and its response. They can press the government for action and gather evidence. If this petition reaches 100,000 signatures, the Committee will consider it for a debate.
The Committee is made up of 11 MPs, from political parties in government and in opposition. It is entirely independent of the Government. Find out more about the Committee: https://petition.parliament.uk/help#petitions-committee
Thanks,
The Petitions team
UK Government and Parliament