Issue: Tariff structure
Review conclusion
The Chancellor noted that respondents agreed setting bands in three-month intervals was appropriate and generally effective. However, issues arose when prognosis periods overlapped two bands, leading to disputes between claimants and defendants. The Chancellor observed that MedCo data from 2019/20 closely resembles the 2023/24 data, with only minor shifts in prognosis period distribution. Consequently, she does not intend to change the current banding, attributing settlement agreement issues to the clarity and quality of medical reports rather than the tariff bands themselves.
DWF commentary
The MedCo consultation response is expected shortly and could be in the next two weeks. This will address issues around the quality of medical evidence, as well as the fees payable. Our full review will follow its publication.
Issue: Psychological injury
Review conclusion
The Chancellor acknowledged disagreements on what constitutes a minor psychological injury, leading to an increase in secondary medical reports. She referred to the Minor Injuries chapter of the JCG which states that a minor injury is usually one which lasts for no more than three months and that a psychological injury such as travel anxiety may be considered as minor even if it lasts longer than three months. She said: “The government’s expectation is that this approach should be applied to minor psychological claims associated with a whiplash injury. A second report would normally only be needed if there is a more significant diagnosable psychiatric injury or post-traumatic stress disorder as described in Chapter 4 of the JCG. Minor psychological injuries covered by the tariff should be distinguished from these, and officials will consider ways to provide further guidance."
DWF commentary
Our view remains that a clinical diagnosis is not in itself indicative of severity, and efforts to be more prescriptive may have unintended consequences.
The reference to further guidance will potentially be via changes to the OIC Guide, or via MedCo.
Issue: Inflationary uplift
Review conclusion
It was acknowledged that recent high inflation rates have affected the real value of the tariff. Average settlement values for whiplash and non-tariff injuries were considered, showing differences between OIC and HMCTS data. The Chancellor considered whether to use RPI or CPI for inflation adjustments, with CPI being recommended. Two options for adjusting the tariff were discussed: accounting for actual inflation up to May 2024 or adding an additional three-year buffer. It was felt that claimants were better protected with the buffer in place, despite inflation rises being due to one-off events. The recommendation is to increase the tariff to account for actual inflation and include a three-year buffer, leading to a 14-15% increase in each band.
DWF commentary
A 15% increase inclusive of a three-year buffer is good news for insurers. The decision to go with CPI over RPI is also positive. The review robustly makes the case for CPI, which may open discussions on the appropriate rate for courts to award. We understand that a test case on this point is currently being prepared.
Issue: Small claims track limit/mixed injuries
Review conclusion
The Chancellor addressed compensators' arguments that the increase in the tariff, combined with the recent increase in JCG amounts for non-tariff injuries, would result in many claims being revalued above £5,000. Their proposal was to increase the small claims track limit to match any increase in tariff amounts to ensure claims remain in the appropriate court tracks. The Chancellor concluded that while there is some logic to this argument, it is outside the scope of the current exercise and requires careful consideration of all relevant data by the MoJ. Initial analysis indicates that less than 5% of claims using the OIC would be valued above the small claims limit under the new tariff. MoJ officials will continue to monitor settlement data to determine if a significant proportion of claims are impacted as suggested. Further action will be considered if justified by the evidence.
DWF commentary
Whilst this issue was out of scope, there seems to be an acknowledgment that it should be addressed if the data evidences a problem. This has been somewhat mitigated by the increase being lower than the 20% rise many expected. Indications from the MoJ are that it would need to be part of a broader review of track limits as it could affect claims other than RTA whiplash. It seems that any increase to the Small Claims track is not going to happen any time soon.
Issue: Judicial uplift - exceptional circumstance
Review conclusion
The court can award up to 20% more than the tariff in exceptional cases. Stakeholders noted a lack of clear definition for "exceptional." The government decided not to define "exceptional," leaving it to the courts to decide based on evidence.
Issue: Next steps - consultation and implementation
Review conclusion
A consultation with the Lady Chief Justice will be undertaken, followed by laying the revised Regulations in Parliament. In terms of implementation, the revised Regulations will apply to claims from accidents occurring after the commencement date.
DWF commentary
We do not expect changes during the consultation period, and our expectation is that implementation will occur in Quarter 2 2025, most likely April. The revised Regulations will only apply to claims from accidents occurring after the commencement date, leading to a longer lag period than expected.
If you require anymore information, please contact Joanne Baker.
