Ministry of Justice intends to press ahead with proposals to scrap general damages for personal injury claims
Today, 4 May 2016, Justice minister Lord Faulks confirmed that there will be no retreat on the far-reaching plans to reform the personal injury sector. The plan to reform the industry were first announced last November by chancellor George Osborne – with a pledge to bring motor premiums down by at least £40 a year.
Even though the government has made this pledge the promised consultation of the industry has yet to materialise. However, Faulks told personal injury lawyers that the Ministry of Justice still intends to press ahead with proposals to scrap general damages for whiplash claims and raise the small claims limit to £5,000 for all personal injury claims.
Speaking in Birmingham at the annual conference of the Association of Personal Injury Lawyers (APIL), the first by a serving justice minister at the APIL conference since 2007, Faulks said the government is still fully committed to its reform and plans to bring out the consultation after the EU referendum. He reiterated that the intention is to implement changes through a mixture of primary and secondary legislation in 2017.
However, Faulks did concede that the proposals – particularly the plan to remove general damages – would come as a ‘shock’ to practitioners, but said they were necessary to help consumers in the long-term.
Faulks said: ‘It is not right that people who try to cheat the system should get away with it and, in doing so, force up the price of motor insurance for other motorists’
‘There is also no doubt that many such claims are driven by a substantial industry that encourages unnecessary, inappropriate or even fraudulent claims through cold calling and other social nuisances.’
On the small claims limit, the threshold had been set at £1,000 for 25 years with Faulks stating ‘the time is right’ to raise it as part of a wider package of reforms.
Delegates challenged Faulks and asked where insurers’ savings from the Jackson reforms had gone and what help litigants would have if the small claims limit was increased.
Faulks admitted he did not know what had happened to any increased revenue for insurers following the implementation of the Legal Aid, Sentencing and Punishment of Offenders Act in 2013, but – to some laughter in the conference hall – said he was confident insurance firms will pass on savings from the forthcoming changes.
Faulks went onto state that the government will be monitoring the effect of the reforms on the price of insurance and will consider further action if the premiums do not reflect reduced costs. He admitted the obvious scepticism from the industry, but it is a market and in the interests of insurance companies to attract customers, therefore they will have a significant incentive to reduce premiums.
Faulks also briefly addressed the issue of fixed costs for civil justice, which came to prominence earlier this year when Lord Justice Jackson called for all civil claims up to £250,000 to be subject to fixed recoverable costs.
The minister said the government supports the principle of extending fixed recoverable costs and, in light of Jackson’s comments, ‘is now considering the way forward, including how best to deal with differences between different types of civil litigation’.
Stephen Haddrill, director general at the ABI, is on record stating: ‘the government’s proposals should be implemented immediately. Our compensation system is too slow, is riddled with high legal costs and undervalues rehabilitation. Insurers want to pay compensation and arrange rehabilitation faster than the current system allows.’