Government Further Erodes Victims’ Rights
In his Autumn Statement the Chancellor introduced, without fanfare or prior warning, at least one measure which has nothing to do with the UK economy. He announced an increase in the small claims limit for personal injuries claims from £1,000 to £5,000, anticipating this would reduce the overall cost of motor insurance by approximately £1bn. Crucially, he went on to say that he expects the industry to pass on this saving and deliver to individual motorists an average annual saving of up to £50.
However, it seems likely that only a lawyer or insurance professional will understand the finer implications of this apparently minor rule-change. Small Claims Courts operate under the auspices of County Courts but function rather differently in some respects – for example, a successful claimant cannot recover the costs of instructing a solicitor to act for them. In practice this means that persons suffering any type of injury caused by someone else could in future be left at the mercy of resource-rich insurance companies unless their claim is initially assessed at more than £5,000. In contrast, the way remains open for insurance groups, easily able to afford top-flight legal representation, to realise their main aim of minimising their award payments.
If this proposal goes ahead, we anticipate that a large number of vulnerable accident victims will be deprived of the opportunity of an independent assessment of their claim and may find their cases settled too early (before they have fully recovered) or receive inadequate compensation. Quite often an injury that at first sight appears minor can develop into something altogether more serious that may have devastating effects: a subtle brain injury, for instance. In these cases, if the claim is settled too early there can be no further redress.
On the face of it, this new policy saves no money for the UK economy, although the Chancellor has asked insurers to pass any inherent savings on to motorists. However, industry commentators have already predicted it may be some time before significant insurance sector savings are passed on to consumers. It is worth pointing out that when changes were made in 2013, to the financial advantage of insurers, most failed to pass on any savings at all to the consumer.
Even if some insurers do drop their premiums, is the overall cost too high? Any resultant (small) benefits are likely to be at the expense of many innocent accident victims who would, in future, be forced to stand alone and take on the might of the insurance multinationals without legal representation.
And surely, overall, this proposal is likely to have the unfortunate and undesirable effect of clogging up the already overburdened English courts with more and more litigants acting in person without the expertise of a lawyer to guide them through our labyrinthine justice system.
Ian Oliver. Partner.