The Civil Liability Bill marches on
On 23 October 2018 the Bill stepped closer to enactment when it cleared the House of Commons final attempt by those opposed to the Bill to frustrate…
The personal injury sector has been carefully watching the Civil Liability Bill (“the Bill”) as it progresses through parliament. Claimant and defendant firms have lobbied hard to ensure that policy makers received a robust view from both sides of the fence. On 23 October 2018 the Bill stepped closer to enactment when it cleared the House of Commons final attempt by those opposed to the Bill to frustrate the scale of reform.
The Bill has not been greeted warmly from all sides and has survived a number of attempts to water down its impact. The third reading in the House of Commons was no different with the Bill successfully emerging from a full frontal assault from the opposition. Attempts were made to amend the Bill to curb the proposed increase to the Small Claims Track limit to £1,500 as opposed to £5,000. There was also an attempt to remove the tariff of compensation for whiplash injuries and to place the valuation of these claims into the hands of the judiciary. Needless to say that had those opposed to the Bill been successful in securing those proposed amendments, they would have derailed the underlying purpose of the Bill, removed any value from the reforms and undermined the Government’s aims to reduce the cost of claims, tackle fraudulent claims and reduce the premiums of honest policyholders.
The Lord Chancellor has however made one notable concession, in that amendments have been made to make provision for the Financial Conduct Authority (“FCA”) to require insurers to provide it with information as to the effects of the Bill on claims’ costs and premiums. This amendment is designed to hold insurers to account and to ensure that the benefit derived from the Bill is passed back onto policyholders through a reduction in their premiums.
The Bill is not out of the woods yet as, together with its amendments, it has now passed back to the House of Lords for further consideration and we could yet see further efforts to derail or dilute the reforms. Any such attempt could delay implementation and see a further delay in the delivery of much needed reforms on the law relating to both whiplash claims and the discount rate. However, should all go to plan, once enacted the whiplash aspects of the Bill will then come into force in April 2020. By contrast, the discount rate elements of the Bill will take immediate effect and will pave the way for a new discount rate to be set within a maximum period of around 9 months. The reality is that a discount rate will almost certainly be arrived at much more quickly.
Whilst it is not yet clear is how the Bill will impact on how whiplash personal injury claims will be brought by claimants in the future. Many commentators have voiced concerns about the potential for the Bill to impact the ability for access to legal representation. It is our view that whilst that may be one of the outcomes from the reforms, the provisions of the Bill lay the ground for a more transparent, streamlined and cost efficient process, sufficiently simple to allow injured parties to navigate the process without legal representation. In that respect, these reforms will come hand in hand with the new claims portal which will allow those bringing a claim without legal representation to do so easily.
Whilst this portal will require extensive user testing, it remains possible for it to be ready for launch when the Bill comes into force, although we understand that the developer of the portal system is still to be selected which could delay matters. The discount rate provisions will, in the meantime, pave the way for a more ‘just approach’ to the calculation of the discount rate, facilitating 100% compensation for injured parties but avoiding the overcompensation which has been commonly felt from the current rate of -0.75%.
One further consideration is how Claims Management Companies (“CMCs”) will adapt to the new world. CMCs have historically been more agile in their reactions to large scale reforms and it is envisaged that these reforms will be no different. Although we still await the outcome (imminently) of the FCA’s consultation on their proposed regulatory framework which may go some way to tackling the dysfunctional behaviours we have seen from some CMCs in the past.
Can we help?
We will continue to liaise with Government over further developments and as the Civil Liability Bill continues its progress through Parliament, and more detail emerges, we will provide updates with a view to assisting compensators in their preparation for these reforms.
In the meantime, should you wish to discuss this in more detail, or would like assistance with any other matter, please do not hesitate to get in touch.