The Whiplash Reforms
Read our detailed guide containing all the information you need to know on the whiplash reforms
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.
The challenges for insurers
The forecasted challenges for insurers are many and varied, including:
1. IT Infrastructure
Insurers have been working with the Motor Insurers’ Bureau for some considerable time, learning what technology they need in place to be able to access the new portal and process claims. It is assumed therefore that all insurers have the appropriate IT infrastructure in place. If not, act now.
2. Organisational structure
The great challenges for insurers are organisational and logistical. Post-May 2021, insurers will have a wholly new method of claims handling to manage so may need new team structures. From May 2021 claims can be categorised as:
|Claim category||Method of claims handling|
|Non-injury claims (<£10k)||Traditional SCT|
|Adult injury claims (<£5k) (not qualifying)||Traditional SCT|
|Child injury claims (<£1k)||Traditional SCT|
|Adult injury claims (<£5k) (qualifying)||(new) SCT Portal|
|Child injury claims (>£1k and <£25k) — liability admitted||(existing) MoJ Portal|
|Adult injury claims (>£5k and <£25k) — liability admitted||(existing) MoJ Portal|
|Child injury claims (>£1k and <£25k) — liability denied/out of Portal||Traditional FT|
|Adult injury claims (>£5k and <£25k) — liability denied/out of Portal||Traditional FT|
|All non-injury claims (>£10k and <£25k)||Traditional FT|
|All MT value claims (>£25k)||Traditional MT|
Insurers, therefore, need to have teams operating on two portal platforms as well as in the traditional manner.
The pool of traditional SCT claims will increase in size to embrace those adult claims which become SCT due to the increase in the SCT limit but do not qualify for the new portal (yellow). Insurers will need to quickly gauge the size of the volume increase and be capable of resourcing it.
Handlers of new portal claims (red) will need to be capable of dealing with vehicle damage claims as well as injury, liability as well as quantum — unless the insurer delineates between initial liability disputes and later quantum assessments/disputes and is able to reallocate internally without friction or risk.
3. Preparing liability evidence
Insurers have, until now, provided questionnaires/completed claim forms to the other side in support of denials. The new system requires them to respond to a claim and prepare evidence in a manner that prepares the case for trial, as lawyers currently do. Ensuring completion of Statements of Truth will therefore become an insurer obligation.
4. Dispute v delay
Quantification seems likely to be put off whilst liability is unresolved. Delay to a court adjudication on liability could mean a claimant is not medically examined for months (perhaps years) after presenting a claim. That might mean lengthier prognoses. Partial denials would therefore seem to present an indemnity spend risk.
5. More routine concerns
It has long been considered that insurers face challenges from:
- Increased claim numbers (through ease of presentation/guaranteed figure for damages under the tariff)
- Fraud — identifying and dealing with it
- The value of tariff and non-tariff injuries
Part 2 of the government's response to the consultation
On 22 March 2022, the government released ‘Part 2’ of its response to the Consultation it put out in November 2016 on reforming the soft tissue injury (whiplash) claims process in England and Wales.
Due to the size of the Consultation and the need to prioritise issues, it was decided that the Consultation would be responded to in two parts. Part 1 was the starting gun for the series of policy and legislative actions which lead directly to ‘the whiplash reforms’ that went live on 31 May 2021.
Part 2 was to follow ‘in due course’. That time is now.
The areas of the Consultation which became Part 2 are whether:
- the CNF should be amended to include details of a referral source (i.e. recommendation 17 of the final report from the Insurance Fraud Taskforce (IFT) published in January 2016)
- claimants with Qualified One-way Costs Shifting (QOCS) protection should require court permission to discontinue within 28 days of a trial (that was a recommendation made by the IFT’s PI sub-group)
A call for evidence on:
- options for tackling credit hire issues
- options relating to the need for early notification of claims
- how the provision of rehabilitation treatment might be improved
- whether there should be restrictions on the recoverability of disbursements
- the possible introduction of a European style Barème system for PI claims
- other suggestions on how Government reform could help control costs of civil litigation
The Government’s response this week is that no further action is to be taken in any of those areas. Its logic is:
|Referral Source||No action needed. CMCs are more tightly regulated than was the case when the Consultation went out AND Claims Portal Co introduced a new CNF mandatory field to this effect within the RTA Portal process.|
|QOCS||No cross-industry consensus on the need for this change could be reached so the Government will continue to monitor.|
|Credit Hire||The Government noted reinforcement and revision of the GTA so felt it best to support that approach. Changes to the law in this area will also entail primary legislation, so are not straightforward.|
|Early Notification||This held no attraction for the Government.|
|Rehabilitation||No action is to be taken because:
(a) the Government is working with stakeholders to come up with a new Rehabilitation Code
(b) the effect of the whiplash reforms are as yet unclear
(c) longer term, the Government will look at the feasibility of expanding MedCo to include the provision of rehabilitation services.
|Disbursements||Disbursements This option received little support. The whiplash reforms adopted suffice.|
|Barème System||The Government liked this option but it was felt that the whiplash reforms suffice for now.|
|Control Costs||Control Costs The Government noted many smart suggestions but stated that, several years on from the Consultation, many controls have been taken forward (such as the extension of fixed recoverable costs and the ban on ‘cold calling’).|
This response draws a line under the discussion as to what reforms are needed in the soft tissue injury and related claims space. Organic reform will continue via the usual channels and as part of reform packages focussed on other areas and which incidentally impact on this area but, in the main, the Government feels its work in this area is largely done. The reforms we have today are all that we are likely to see.
Weightmans has been heavily involved in the discussions leading to, and in implementation of, the whiplash reforms and has a specialist team focusing on the problems arising, including tariff/non-tariff injury compensation calculation, early ‘gaming’ of the OIC process or claimant attempts to avoid the limitations on costs recovery.
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.