The Government is currently considering proposals which would clamp down on road accident related whiplash and other minor soft tissue injury compensation claims.
As part of its reform plans, the Ministry of Justice is focusing on what defines a minor soft tissue injury and whether this definition should be linked to the length of time a claimant suffers symptoms.
One proposal suggests scrapping the ability for people to recover damages for Pain, Suffering and Loss of Amenity (known as PSLA) for minor soft tissue injuries.
Claims for special damages, which cover loss of earnings, care and rehabilitation could still be submitted along with a medical report, as is currently the case. However, in future, claimants might also have to provide medical evidence to clarify the duration of their symptoms.
A second proposal recommends introducing a fixed compensation pay out of £400 – or £425 if there are psychological injuries – for minor soft injury claims.
It also suggests introducing a tariff for those injuries which go beyond the definition of “minor” and give rise to symptoms lasting for up to two years. In such cases the maximum amount payable in compensation would be £3,500, rising to £3,600 where the claimant also has psychological injuries.
If the reforms make it on to the statute book, then there will be far-reaching implications for lawyers, insurers and motorists.
Simon Hill, managing director of Total Motion, said that the whole insurance industry needed to be reformed so that whiplash and other non-serious minor claims became much harder to see through.
He added: “Currently law-abiding motorists are bearing the cost of inflated compensation claims through higher motor insurance premiums. It is also time that lawyers and ambulance chasers were given a fixed cost tariff of what they can charge when pursuing personal injury claims for motorists.”
According to insurance industry commentators, some law firms may well withdraw from the personal injury sector if they can no longer secure fees at their current high values.
Consequently, it is anticipated that more claims management companies will set up as they hurry to fill the gap in the market left by solicitors.
Generally, reform is seen as positive news for insurance companies, as their indemnity expenditure would fall however insurers could see a hike in operational spend due to an increase in the number of claimants, who, unable to secure a solicitor, bring their claims without legal representation.