The Whiplash Reforms
The reforms, will now officially go live for accidents on or after 31 May 2021.
The Ministry of Justice has finally published the suite of documents required to implement the long-awaited whiplash reforms. The exact list of documents published is set out below.
The reforms, which will now officially go live for accidents on or after 31 May 2021 are:
- Increase in the small claims track limit for adult injury claims arising out of motor accidents from £1,000 to £5,000
- Creation of the Online Injury Claim (OIC) Portal through which small claim track value injury claims from vehicle occupants are to be processed
- New Practice Direction (27B) for those OIC Portal claims that require court adjudication
- Setting a tariff of compensation for whiplash injuries with a prognosis of less than two years
The industry continues to await ‘user guidance’ aimed at unrepresented claimants.
The tariff for whiplash injuries has been set slightly higher than the draft tariff published some time ago. The Regulations set out the tariff as follows:
|Duration of injury||Whiplash only||Whiplash plus minor psychological symptoms|
|Not more than 3 months||£240||£260|
|More than 3 months, but not more than 6 months||£495||£520|
|More than 6 months, but not more than 9 months||£840||£895|
|More than 9 months, but not more than 12 months||£1,320||£1,390|
|More than 12 months, but not more than 15 months||£2,040||£2,125|
|More than 15 months, but not more than 18 months||£3,005||£3,100|
|More than 18 months, but not more than 24 months||£4,215||£4,345|
The other headline-grabbing change is that all children and protected party claims, regardless of value, will be allocated to the fast track in future.
Whilst the MoJ has published a wealth of documents, the sum total of the reforms detailed above is to render all injury claims worth less than £5,000 and overall worth less than £10,000 as small claims and therefore not costs-bearing (unless the claimant is a vulnerable road user, a child, or an adult lacking capacity)
Whilst the tariff is slightly higher than the previous version published, it is still significantly less than the current awards dictated by the JC Guidelines. Therefore, many claims will now be worth less than the new £5,000 small claims track limit and will be processed on the small claims track for the first time.
The existing RTA Portal will now only process those claims with an injury element worth over £5,000 or those with an injury element worth over £1,000 which do not qualify for the OIC Portal.
The OIC Portal — how will it work?
As with the RTA Portal, a Pre-Action Protocol details what happens whilst the claim is handled by a compensator and a Practice Direction governs the process surrounding the issue of proceedings and court process leading to adjudication.
The process is specifically designed to allow a claimant, whether represented or not, to claim for injury compensation worth less than £5,000 and other losses, save for vehicular loss compensation which the claimant does not keep but returns to others – such as subrogated insurer claims for PAV or repair, and hire.
So, if the claimant paid for repairs, that loss is pursued via this Protocol, but not if their insurer paid. Vehicular losses where any compensation would be payable to another are known as ‘Non-Protocol Vehicular Costs’.
Unlike the RTA Portal, and as expected, the OIC Portal will also provide a method for resolving liability disputes as well as quantum.
Insurers get 30 days (MIB get 40 days) to investigate and respond with evidence on liability and the response requires a Statement of Truth. Statements of Truth feature prominently, with claimants and defendants, or even compensators on their behalf, if warranted, being required to sign them.
If compensators fail to respond within the timeline, they are deemed to admit liability — this is a change to the current RTA Portal process where a failure to respond on time takes the claim out of the Portal process.
If there is no admission, there is a facility for negotiation and offers on liability.
In the face of a compensator refusing to concede any liability and the claimant still maintaining the claim, the OIC Portal assists the claimant to issue proceedings for a liability adjudication only, before the medical evidence stage is reached.
If some liability attaches to the defendant following a hearing at court, the proceedings are stayed whilst the claim returns to the OIC Portal process to deal with quantum. Should quantum not be agreed, the proceedings would be reactivated and there would be another hearing on this issue.
Unlike the RTA Protocol, this Protocol expressly provides for a claim to leave the process if the compensator alleges fraud or fundamental dishonesty at any point. Again, the evidence on this issue needs to be presented to the claimant in a document signed by a Statement of Truth which is a development that will need some careful consideration.
If some liability attaches to the defendant – either consequent to a full or partial admission, or court adjudication, medical evidence is obtained and negotiation begins.
The decision to use this Protocol process, before medical evidence is obtained, is the claimant’s, but claims considered more suitable for the RTA Protocol due to value can be pushed across at any point.
In keeping with the stated aim of reducing litigation on motor claims and reducing costs, offers — even previously rejected offers — can be accepted. Also, further evidence (including medical evidence) and comments can be uploaded at any time, even after the negotiation period has ended. The system stretches to allow a compromise.
Unlike with the RTA Portal, interim payments can be made at any time but only in relation to the non-injury element of the claim and the system allows claimants to issue proceedings for the purpose of forcing an interim payment.
Non-Protocol Vehicular Costs (NVC)
Such losses do not form part of the losses considered for valuation purposes and are not pursued via the OIC Portal process. However, as with all litigation, if proceedings are issued, a claimant is required to pursue all of their claim at once and so a claimant set to issue proceedings for a determination of damages, is therefore prompted to pull all NVC together, with a view to them being added into the proceedings before issue.
The claim ‘may’ leave the process if the total value of the claim exceeds £10,000. The word ‘may’ seems to allow for the potential for a compensator to make a significant interim payment so reducing the claims value to below the threshold.
A compensator faced with such NVC losses having been added, needs to respond by setting out their arguments in response and also attaching their evidence. Failure to do so, could mean the defendant being unable to challenge this element of the claim at Court.
Costs and conduct
There is almost no reference to costs penalties as a consequence of conduct throughout the OIC Portal process. Indeed, the only reference is as a penalty should a compensator unreasonably refuse to fund a further medical report. In such circumstances, the compensator can face unreasonable conduct costs under CPR27.14. The Practice Direction also requires the compensator to pay the court fee if a claimant is forced to issue to obtain an interim payment.
The Practice Direction expressly disapplies the provision within the CPR which allows for ‘costs only proceedings’ to resolve disputes on costs. Instead, it provides an avenue for a claimant who cannot resolve their claim for disbursements to proceed to court for an adjudication on that point alone.
A claimant can issue proceedings for several reasons, being liability determination, quantum assessment, to request or enforce an interim payment, limitation, fees liability, fees amount determination, or to force payment of sums due for damages or fees.
We have already seen some claimant personal injury practices decide to leave the motor claims market and it is likely that CMCs will replace them, at least to some extent.
Predicting and understanding claimant behaviours, and the tactics of those acting for them, will become even more important in the future to mitigate leakage. With genuine litigants in person this will be more difficult to predict but we expect the growth of online self-help forums as well as the migration to a smaller number of law firms and CMCs.
Whilst the reduction in damages and costs will be welcomed by the insurance market, these reforms are extensive and so there is a lot to adapt to. Processes will have to become more complex and flexible at least in the short term. In time, innovative solutions should emerge.
With our business analysts, we have mapped the new processes. If you would like to compare notes, as always, we are keen to collaborate, so please get in touch. Also, we will be focusing on these reforms at our next Motor Forum on 23 March 2021.
For further information or support in reacting to the whiplash reforms, contact our motor insurance solicitors.