All too often, clients have told us about their frustration when Road Traffic Accident (RTA) claims against them are settled and an apparently uninjured driver receives substantial compensation for whiplash. To make matters worse, legal costs can exceed the damages paid to the claimant.
New protocols should reduce some of this frustration by reforming the way low-value RTA personal injury claims are managed.
Often called the “Whiplash Reforms”, the new measures apply to any road traffic accident on or after 31st May 20211. According to the Ministry of Justice the new reforms are intended to reduce insurance costs for ordinary motorists by tackling the continuing high number and cost of whiplash claims.
New small claims limit
The new protocols apply to claims below £5,000 for adult RTA injuries (pain, suffering and loss of amenity only) or £10,000 in total. Claims for subrogated losses, where the insurer has paid out and is seeking to recover their costs from someone else, don’t form part of the limit. The small claims limit for injuries sustained in non-RTA accidents remains at £1,000.
What the new arrangements mean for you
Claims will be submitted via the Official Injury Claims (OIC) portal. It’s anticipated most will be made by the claimant as “litigant in person”. However, claims management companies or solicitors can submit claims on their clients’ behalf.
The protocols allow only 30 days to provide a material response to claims and either;
- admit liability in full or in part
- admit liability, but dispute the accident caused the injury
- deny liability
A quick response is needed and must be supported by your driver’s version of events and a signed statement of truth. Failure to meet this timescale will result in an automatic acceptance of liability in the claims portal.
Excluded claims
Not all claims are covered by the new protocols. Examples of those which fall outside are;
- injuries to children
- vulnerable road users e.g. motor cyclists and passengers, wheelchair/mobility scooter users, cyclists, horse riders and pedestrians
- foreign registered vehicles
Whiplash tariff to control costs
The reforms introduce set tariffs for whiplash injuries and a higher tariff applies to whiplash accompanied by minor psychological damage.
The award is based on a sliding scale according to the duration of injury, ranging from £240 for whiplash only lasting less than three months up to £4,345 for whiplash with minor psychological damage where the effects last for 18 to 24 months.
The claimant can apply for up to a 20% uplift in the tariff in ‘exceptional circumstances’. This could be if their whiplash is exceptionally severe or where circumstances have increased their pain, suffering or loss of amenity.
These tariffs should reduce the cost of motor claims, especially for low speed impacts. However, it’s possible more secondary injuries could be alleged to try inflate damages above the £5,000 limit.
Costs for whiplash claims are not recoverable with the exception of a mandatory medical report.
What the reforms may mean for claims generally
Whilst the reforms were designed to reduce motor claims costs, they may make claims handling more difficult due to the likely number of litigants in person.
It’s likely also claimants and their representatives may seek to take claims out of the protocol by increasing their value through allegations of multiple injuries or more severe psychological damage.
We may see claimants and their representatives increase the value of claims by alleging multiple injuries or more severe psychological damage. By doing so, claims will no longer be subject to the protocol’s cost restrictions.
The reforms will also have a significant effect on providers of uninsured loss recovery (ULR) services. As around 90% of claims are expected to fall into the new portal, the scope for recovery of ULR fees from defendants’ insurers is vastly reduced.
Final thought
Reporting accidents and claims to your insurance provider immediately is now more vital than ever. Drivers must respond to your insurers’ information requests fully and speedily. Generally, the most efficient way of doing this is to report claims directly to insurers. However, the involvement of leasing companies and accident management companies can add complications.
1. https://thejournal.cii.co.uk/news-analysis/2021/03/02/new-whiplash-rules-kick-may-31
The sole purpose of this /article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.
