Whiplash injuries: a tale of two systems

News | Sat 25th Feb, 2017

In October 2013 the government published its response to a “Consultation on arrangements concerning whiplash injuries…” In the document the then Secretary of State, Chris Grayling, estimated £1.5 to £2bn of savings for the insurance industry that could come from his reforms. He said that insurers had made a commitment at a summit in February 2012 to pass on savings to consumers.

According to the Association of British Insurers average motor insurance premiums did decrease from 2012 to 2014¹. However by the first quarter of 2016 they were back at their 2012 levels. Recent data has shown a sizeable increase average comprehensive insurance policies during the course of 2016². The ABI gave three reasons for this: the three increases in insurance premium tax since July 2015, rising repair costs due to complex technology and the decline in the value of the pound affecting the cost of parts and an increase in the cost of personal injury claims. It said that the average personal injury claim for the third quarter of 2016 was settled for £10,674 which was a 2.3% increase on the same quarter in 2015.

It is against this background that the Ministry of Justice announced on 23^rd February its response to the consultation “Reforming the soft tissue injury (‘whiplash’) claims process”³. The introduction anticipates £1bn of savings for the insurance industry which it says will result in a £40 saving per annum per policy.

The MOJ summarised its policy decisions as follows:

1. the introduction of a tariff of fixed compensation for pain, suffering and loss of amenity for claims with an injury duration of between 0 and 24 months;
2. providing the judiciary with the facility to both decrease the amount awarded under the tariff in cases where there may be contributory negligence or to increase the award (with increases capped at no more than 20%) in exceptional circumstances;
3. introducing a ban on both the offering and requesting of offers to settle claims without medical evidence;
4. increasing the small claims limit for RTA related personal injury claims to £5,000; and
5. increasing the small claims limit for all other types of personal injury claim to £2,000.

Much of this will not come as any surprise. Had successive governments not failed to increase the personal injury small claims track limit (set in 1991) in line with inflation it would currently be around £2,000 (based on the RPI). The increase in the small claims limit for general damages for personal injuries to £5,000 was the subject of consultation in 2012 and the government decided not to proceed in October 2013 because of the risk of an adverse impact on those with genuine victims of RTAs and because it feared that claims management companies would take advantage. Not unreasonably it said however that it wanted to consider the impact of other reforms before returning to the question.

Three aspects of the reforms are particularly surprising: the different thresholds for personal injury claims depending on whether they are sustained in a road traffic accident, the different tariffs introduced for road traffic accidents and the discretion to allow an increase of up to 20% in exceptional circumstances.

The tariffs announced are startling. A whiplash injury with minor psychological symptoms will attract the following awards:

The logic behind the new tariffs must be to make it economically impossible for lawyers to make any money from whiplash claims on the small claims track (e.g. by taking a cut of the damages). Equally the tariffs have been set at such a level as to make it not worth anyone’s while making a claim if their symptoms have lasted for no more than a few months.

The combined effect of the new tariffs and the differing thresholds will undoubtedly lead to some bizarre – and arguably unjust – results as the following examples demonstrate:

Using the figures from above table a nurse who suffers a soft tissue injury to her neck as a result of an assault by a patient in a hospital might receive in the region of £1,750. If the same nurse or a paramedic happens to be in an ambulance going to an emergency call when there is an RTA which causes a similar injury, she will receive £225. Both of these claims would be on the small claims track.

If a family breadwinner (self-employed and on a low income) with two children and an expectant wife was on his way to work and, due to an RTA, suffered a 12 month whiplash injury and was unable to work for 2 months he would get £1,190 in general damages and in reality would have to represent himself. If he was employed and suffered similar injuries due to the negligence of his employer he might get in the region of £3,100 by way of general damages and he would be able to get legal representation.

The government proposes to give judges a discretion to allow a 20% uplift in “exceptional circumstances”. “Exceptional circumstances” are not defined and it is hard to see how someone who has suffered in a particularly unpleasant way will be properly compensated by an additional 20% – if they are able to establish exceptional circumstances.

The anticipated implementation date is 1^st October 2018 and will to a large extent be brought in by the Prison and Courts Bill (the impact assessment was published on 24^th February 2017⁴). These reforms will have a huge impact on those who suffer whiplash injuries in road traffic accidents and will put many personal injury lawyers out of work. Will we see insurance premiums reduced? A cynic might anticipate that increases in vehicle repair costs and insurance premium tax will offer insurers a perfect explanation for not passing on any savings. Only time will tell.

^{1 https://www.abi.org.uk/News/Industry-data-updates/2016/04/ABI-average-motor-insurance-premium-tracker-Q1-2016-data}

^{2 https://www.abi.org.uk/News/News-releases/2016/12/Motor-insurance-premiums-reach-highest-recorded-levels}

^{3 https://www.gov.uk/government/consultations/reforming-the-soft-tissue-injury-whiplash-claims-process}

4. ^{https://www.gov.uk/government/publications/prisons-and-courts-bill-overarching-documents}