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Exclusive insight from ALPS: The Civil Liability Bill

Lyndon Willshire, Head of Sales & Marketing at ALPS, delves into the upcoming changes set to take place as a result of the Civil Liability Bill – essential reading for the broking community.

After many years of discussion and debate the government has finally signed off on a course of action to drive down the cost of car insurance by addressing rises in motor insurance pay outs for small personal injury claims.

Through the Civil Liability Bill, which gained Royal Assent on 20th December 2018, the government sets out a package of measures to bring about reforms to personal injury compensation that it believes will mean a fairer system for claimants, insurance customers and taxpayers.

Why?

Whiplash style claims in the UK are more common than in other major world economies. It is reported that road accidents have fallen by 30% since the mid-2000s, but conversely there has been a 40% increase in personal injury claims. The government believes many of these personal injury claims are exaggerated and fraudulent.

The planned reforms are designed to clamp down on the perceived compensation culture. We will also see action taken on cold calling activity (the bane of everyone’s life!), regulation of claims management companies and a clampdown on holiday sickness claims, amongst others.

Savings to insurers are estimated to be around £35-£40 per policy and insurers have committed to channel this back, resulting in customer insurance savings.

What?

The reforms will see the small claims court limit increased from the current £1,000 to £5,000. It is believed that small claims under £5,000 are simple and straightforward to settle and do not require the involvement of solicitors.

A new fixed compensation tariff for pain and suffering for whiplash claims will be operable for claimants with an injury recovery period of up to two years. A whiplash claim injury is defined as neck, back and shoulders.

The new compensation tariff will only be applicable to occupants of a vehicle in a Road Traffic Accident and excludes minors and motorcyclists. Also, in exceptional cases the Judiciary could increase the compensation by a set amount.

A ban on settling or seeking to settle whiplash claims without medical evidence of the injury will also be introduced. This will prevent defendant insurers paying off low value claims rather than incur the expense of investigating them properly.

Who?

In the current process, the claimant for smaller personal injuries over £1,000, could utilise the services of a solicitor whereby their legal costs would be recoverable from the ‘at fault’ third party and their insurers. 

It is estimated that 90 – 97% of all Road Traffic Accident personal injury cases will now fall within the new whiplash compensation tariff. This means that any claimant who wants to utilise the services of a solicitor for a small personal injury claim under £5,000, will now have to pay for their own legal costs out their own pocket.

The compensation pay-out is significantly reduced, especially for the smaller injury duration claims. For instance, the bulk of current personal injury claims, in the 0 – 6 months recovery time period, will see a reduction in compensation payable from a cap of £2,150 to a cap of £470.

New Whiplash Compensation Tariff

Injury duration

New tariff amount

Percentage by band

2015 average values

0-3 months

£235

65%

£1,750 - £2,150

4-6 months

£470

7-9 months

£805

25%

£2,600 - £3,100

10-12 months

£1,250

13-15 months

£1,910

10%

£3,500 - £4,500

16-18 months

£2,790

19-24 months

£3,910

Of course, any significant personal injuries sustained through a Road Traffic Accident which fall outside of the new small claims court limit will be business as usual. The claimant will be able to utilise the services of a solicitor with their costs being recovered from the liable third party or their insurers.

How?

For personal injuries in the new small claims court regime, claimants will be able to use a dedicated online portal. The portal is currently being developed and is planned for testing release in October 2019, well before the new regime goes live.

There is a concern that ordinary people will stop getting the appropriate legal advice and support to bring claims for compensation they are genuinely entitled to in law; in other words, restricting their access to justice. This could have a knock on effect by clogging up the court system by claimants who act as ‘litigants in person’ without appropriate legal advice and support.

When?

The new regime will go live in April 2020.

Your customers’ needs

The needs of the insurance customer will not change.

In the event of a non-fault accident, the insurance customer will still need help to find alternative transport, arrange for their vehicle to be repaired, obtain recovery of uninsured losses and loss of earnings etc., excess recovery, ultimately proving their innocence, personal injury compensation whether inside or outside the new small claims court limit and whether they are travelling in the UK or abroad.

The landscape changes further increase the need for insurance customers to pre-purchase quality, fully insured motor legal expenses policies from brokers. Even in smaller personal injury cases up to £5,000 in value, the policy will completely fund the appropriate legal representation needed to ensure the correct compensation is obtained at nil cost for the claimant.


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Registered Office: Hexagon House, Grimbald Crag Close, St James Business Park, Knaresborough, HG5 8PJ.

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