Osbourne lashes out at motor compensation culture in Autumn Statement

25 Nov 2015

In addition to announcing an investment of £700 million in technology-based court reform, the Chancellor of the Exchequer in today’s spending review and Autumn Statement referred to taking further steps to reform “the compensation culture around minor motor accident injuries.” He expects these further changes to reduce the motor claims bill by over £1 billion, which would equate to premium savings of £40-50 per year for customers.

The speech in the Commons gave no details about the proposals. Some further information can be found in the background briefing material, which confirms two key Government policy intentions:

  • To introduce measures to remove the right to general damages for minor whiplash injuries, and
  • To reduce legal costs by transferring injury claims of up to £5,000 to the small claims track

It appears there will be consultation on these and other measures in the New Year, led by the Ministry of Justice. It is not entirely clear if the proposed increase to the small claims track will be limited to motor injury claims.

The briefing material issued by Treasury notes that: “The government is determined to crack down on the fraud and claims culture in motor insurance.” Many measures have already been taken in this area and we expected further recommendations from the Insurance Fraud Task Force in and around the end of the year. Indeed, in the Commons only last week, Justice Minister Caroline Dineage refused to speculate on the Task Force’s likely recommendations, merely saying that: “The taskforce is currently considering its recommendations, which the Government will consider carefully with a view to taking firm action.”

One week on, the Chancellor has clearly not been quite so coy in what he set out and has instead taken bold and decisive action to shape the debate about the motor claims process. That said, the type of changes outlined above will be controversial and will meet with strong resistance from claimant lawyers and possibly some Parliamentarians as well.

There is little doubt that the Chancellor’s headline measures - removing entitlement to general damages and to legal costs in whiplash claims – will get a firm push back from the claimant community and will have taken many by surprise. But other measures such as ‘care not cash’ and more help for direct and unrepresented claimants could be brought forward to ensure balance in the claims process.

To some extent, it looks as if the Chancellor’s latest proposals on further reforms to the motor claims process could cut across issues likely to be covered his own Insurance Fraud Task Force’s imminent report. I’d be very interested to see the focus of its report given today’s news.

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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Alistair Kinley

Alistair Kinley

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