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Thursday 18 March 2021
Public service organisations should take action now to prepare for a massive change in how low value RTA whiplash claims are handled before the Whiplash Reforms (Civil Liability Act 2018) go live on 31 May 2021. The changes apply to road traffic accidents (RTA) from that date.
There is potential for the Reforms to benefit public service organisations, but only if they get systems in order, are alive to the new threats and take steps to combat them. Trends need to be monitored over time, so systems are updated as the landscape shifts.
While the obvious positive aspect for public service organisations and insurers is the reduction in the valuation of whiplash claims brought about by the tariff, there are significant challenges.
A practical challenge is a new online portal process, with a requirement to provide a positive version of events, together with a statement of truth, within 30-working days if liability is to be denied or even partially challenged.
A failure to respond in the 30-day period will lead to an admission. Efficient systems for investigating and establishing any liability defence will be crucial. Claims handlers need to be equipped to deal with the new demands of the process.
These small RTA claims will now be managed through the new Official Injury Claims (OIC) Services online portal. The OIC portal is intended to be used by unrepresented claimants, without the need for professional representation.
Certain types of claimants are excluded, including most notably; children and protected parties, and vulnerable road users such as motorcyclists, pedestrians, cyclists and horse riders.
The Reforms introduce, for the first time, a set tariff of compensation awards for whiplash injuries to the neck, back and shoulder, which continue for up to two years, ranging from £240 to £4,215. The tariff allowances are much lower than previous awards, more so for shorter duration injuries.
There is a small uplift of the tariff for ‘minor psychological injuries’. Also, the tariff can be increased by up to 20% if the injuries are deemed ‘exceptionally severe’.
To escape the new rules claimants are likely to allege their injuries last longer, but also that they suffered ‘other injuries’ beyond whiplash injuries to the neck, back or shoulders to exit the protocol.
The trend to allege non-soft tissue injuries or injuries to other body parts, (like tinnitus or headaches) is likely to gather more pace. Other injuries are not caught by the tariff, so they offer an escape route out of small claims to higher damages and recovery of costs.
The small claims limit for damages for the injury element of road traffic accident claims will rise from £1,000 to £5,000. The intention is to capture the majority of whiplash claims. The overall value limit for small claims remains at £10,000.
Legal costs are not recoverable pre-litigation and are limited to those in the small claims track when litigation arises but there are fears that litigation in this area will increase given the approach taken in the rules.
The lack of recoverable legal costs will not necessarily deter claimant representatives as a simple switch to a damages based agreement (taking a percentage of damages recovered) will achieve similar, if not higher levels of income than under the present system.
Big players in the claimant market remain interested, having invested in technology and system efficiencies. Fewer, bigger claimant law firms and claims management companies (CMCs) are likely to occupy this space. Two prominent CMCs have applied for Solicitors Regulation Authority approval for their new alternative business structure ventures specifically designed to operate in this new arena.
The OIC and the Ministry of Justice (MoJ) provided updates and guidance throughout early March and intend to allow access to the OIC portal in April to help prepare for 31 May.
Whether the new portal is a success remains to be seen. There will be some efforts to raise public awareness, but it seems this will mostly be left to claimant marketing, which is worrying.
Roger Mackle is a member of the FOIL Motor Sector Focus Team and a Senior Associate at Kennedys.