Whiplash Reforms Watch
At the end of February, we had confirmation from the MOJ that the whiplash reforms will not now be introduced until 1 August 2020. We also received a little more detail about the process for ADR (there isn’t one) and how infant claims will proceed. We outlined those developments in our update last month.
There is also growing momentum to limit any changes to RTA only, with the ABI joining with trade unions to call on the government to at least postpone any rise in the small claims limit for EL/PL claims to £2,000. It seems inevitable that will fall by the wayside.
MIB and MOJ updates
This month, the MIB put on more events where they demonstrated the new process, and the MOJ provided policy updates. The slides used by the MIB are available here (pdf). I think it's fair to say more questions were raised than answers given.
The overall plan seems clear, despite not being formally stated:
[We repeat though that these plans pre-dated the escalation of the Covid-19 outbreak.]
Secondary legislation - The MOJ have suggested they are in the process of consulting with the Lord Chief Justice around the tariff, as they are required to do by the Civil Liability Act. The government then needs to introduce secondary legislation (regulations) to provide the final definition of whiplash, set the tariff along with any uplift for exceptional circumstances, ban pre-medical offers (for whiplash) and increase the small claims track for RTA injury claims to £5,000.
There is no imminent deadline for this and the MOJ suggest this will be largely the same as the regulations drafted during the passage of the Civil Liability Act. Yet if that is the case, why do they not just get on with it?
Rules - The CPRC is expected to produce the new Rules and Protocols needed by the beginning of May. The poorer the alignment between systems and rules, the greater the chance of satellite litigation challenging the process.
Official Injury Portal - The MIB will continue to build the Portal according to the assumptions in place so far, presumably from the draft rules to date.
MedCo – there is a consultation out on the new qualifying criteria for medical experts and MROs dealing with unrepresented claimants directly. Once that is signed off by the MOJ, MedCo will have to start the process of auditing all MROs/experts who intend to be presented for providing reports on unrepresented claimants.
Public awareness – whilst there remains an acknowledgment that at some point someone will need to tell the general public that a new system has been built specifically to enable them to bring claims themselves, as yet there is no sign of any awareness/education campaign.
Final Preparations – provided the above were to go to plan (and absent the current issues caused by Covid-19), compensators and claimants alike would have 3 months from the beginning of May to prepare for the anticipated go live date of 1 August. There would also be a need to train the judiciary in how to deal with litigation under the new process.
A few of the outstanding issues relating to the above are:
- The tariff sets out the amount of damages for pain, suffering and loss of amenity payable in respect of the whiplash injury and any "minor psychological injury" suffered on top. It seems pretty clear however there will be no guidance on how the 'tariff plus' style injuries – where there is a tariff whiplash and non-tariff injury, say a sprained wrist, will be calculated. At this stage we understand District Judges have had no training or guidance on the issue and the courts could be kept very busy dealing with individual disputes until we receive some Court of Appeal guidance in the future.
- We now know that, if the compensator disputes liability in whole, or in part, then the case goes straight to court, with the Official Injury Portal assisting with the preparation of documents and if the claimant is successful, the case goes back to the Official Injury Portal for a medical report to be obtained. We don’t know however how that court process will look. The MOJ have talked about developing "bespoke processes" to enable litigants to go to court to establish liability. No doubt something the CPRC are wrestling with at the moment.
- It isn’t clear what role "Stage 3" will play and to what extent small claims processes will be adapted in the new world. It certainly isn’t fit for purpose in its current state (more of which below).
- But what about where causation is raised? The issue was no clearer when raised at the MIB event on 3 March and it remains to be seen whether the claimant will have to pay for a medical report themselves or follow the process above to get a judicial decision. With disputes on causation probably more prevalent than liability, it is a significant gap at the moment.
- Rehabilitation and vehicle related damages are scheduled to be dealt with outside the new process, however presumably they will need to be joined together if proceedings are necessary.
The revised August deadline must surely now present a significant challenge. On 16 March, Anna Fleming COO of the MIB maintained that the "MIB’s work to support the Ministry of Justice’s delivery of the Whiplash Reforms will continue", and that "provided we have their (CPRC) decisions by early May, and the changes are not too far away from what we’ve built to date, we are comfortable we will be ready for the new launch date." But, 8 days seems a lifetime ago in the current climate, and both the MOJ and HMCTS face much more pressing issues, as the whole courts and tribunals network is grinding to a halt, with significant consequences for the litigation process. We are already seeing the blanket adjournment of final hearings, whilst the judiciary and court staff try to get to grips with untested technology.
Online Personal Injury claims service – pilot: earlier this month, Head of Civil Claims and Service Manager at HMCTS, Steven Chapman announced that an online pilot for dealing with personal injury claims was set to launch, late spring. It is to be developed through the year, so that claims can be completed online up to and including the final hearing. Those who are legally represented and pursuing a claim through the whiplash portal will be able to issue their claim through the new online service. It is unlikely however, that it will deal with more than the administrative parts of the process for some time. Again, we shall have to wait and see the extent to which this can now move forward.
Model Directions for credit hire cases: as long ago as 2017, the Civil Procedure Rules Committee proposed that there should be some model directions set down for credit hire claims. It was made clear that the CPRC didn't want a partisan approach, and DWF's Gavin Perry found himself the only defendant representative in a room of CHOs and claimant representatives arguing the defendant corner.
Nothing further was heard until in October 2019 the CPRC acknowledged that in light of the ongoing reforms, the issue could no longer be considered in isolation and that the "wider issues need to be considered alongside the RTA (Whiplash) reforms". The CPRC have however introduced changes to PD 16 which will come into force on 6 April and are intended to reinforce the requirement to plead specific matters such as:
• the need for the replacement vehicle;
• the period of hire claimed;
• the rate of hire claimed;
• the reasonableness of the period and rate of hire; and
There will be a lot more transparency thrust upon the claimant, which can only be a good thing. If they fail to comply the pleadings will be, on the face of it, defective and susceptible to challenge.
Statements of Truth: as well as the credit hire directions, other changes are also introduced to take effect from 6 April, including changes to the statement of truth. This now includes an awareness that making a false statement may result in contempt proceedings being brought, the new wording being:
"I understand that proceedings for contempt of court may be brought against anyone who makes, or causes to be made, a false statement in a document verified by a statement of truth without an honest belief in its truth."
The recently released February 2020 CPRC minutes also reveal plans for changes to CPR 32.14 (false statements) arising out of the Jet 2 Holidays case (contempt and false statements made pre-proceedings), with the proposed revised wording as follows:
"Proceedings for contempt of court may be brought against a person who makes or causes to be made a false statement in a document, prepared in anticipation of or during proceedings and verified by a statement of truth without an honest belief in its truth…"
Electric Scooters: Hot off the press, the government has announced that e-scooters are to get the green light to go on Britain's public roads. The DfT will now consult on the detail of the proposal including what the insurance requirements will be, minimum ages for riders, speed limits and protective equipment. The scooters will initially be trialled in four 'future transport zones', West of England, Derby and Nottingham, the West Midlands and the combined Portsmouth and Southampton authorities.
This is an opportunity for insurers to take full part in the consultation process. It is hard to see anything other than a minimum requirement for third party cover being required given the risk of injury.
Of course, electric scooters have always courted controversy with safety concerns in the UK and across Europe. The first road death in the UK has been well publicised, this being TV presenter Emily Hartridge following an accident in July 2019 with a lorry at a roundabout in Battersea. Just two days after the incident a 14 year old boy suffered a severe head injury in another incident in London. In the United States, where usage is far more widespread, a study carried out by the Public Health and Transportation department in Austin, Texas reported 271 injuries on electric scooters between 5 September and 30 November 2018. Extrapolated, this data set comes to 20 injuries per 100,000 scooter trips. Rather more worryingly, of the injuries sustained were head injuries with 15% traumatic brain injuries, which of course tend to be expensive claims for insurers. Looking at this, one cannot imagine the regulated scooter industry in the UK not having compulsory head protection from the outset.
We have two months' data to analyse as both January and February figures have now been released.
New RTA Claims
New RTA claims submitted in January 2020 amounted to 60,303, an 18.5% increase on December 2019 but a 3.4% fall when taken against January 2019. New RTA claims in February 2020 totalled 56,299, a drop of 6.6% on the previous month but actually static against the same period in 2019.
The cumulative CNFs on a rolling 12 month basis show a continuing but small decline when compared with February 2019.
The daily weighted CNFs per working day show a similar picture.
We can expect to see a significant reduction in March when next month's figures come out given the reduced number of vehicles on the road during the Coronavirus crisis. A significant reduction in claims frequency is already being noticed.
New Casualty Claims
New EL accident claims
There were 3,669 new EL accident claims in January 2020, a 34.7% increase on the previous month, but still 3% down on the same period the previous year. Claims in February 2020 amounted to 3571, a 2.7% drop on the previous month and 3.5% down on the same period in 2019.
New PL Claims
New PL claims submitted in January 2020 totalled 4,648, a significant 35.6% rise on the previous month and static against the same period in 2019. Claims in February 2020 came to 4,488 a decrease of 3.4% on the prior month and 2.1% down on 2019 figures.
Again, there may be a reduction over the coming months due to people being in isolation, but the long term trend would probably be static particularly if the small claims limit remains at £1,000 for EL and PL claims.
PSLA figures and Stage 3 Usage
RTA PSLA figures are remarkably static. The average settlement figure was £2,811 during January 2020, a drop of 0.3% on the previous month and rose again to £2,819 in February 2020. It doesn't seem that the new JC Guidelines are having much of an impact although it might be that slightly shorter prognosis periods provided by medical experts are balancing out the effect of the JCG.
EL accident PSLA is however on the rise. Average payments to Claimants totalled £4,432 in January 2020, a rise of 3.8% on the previous month. February 2020 averaged £4,441, a small 0.2% rise.
PL claims were very similar in terms of quantum, £4,339 in January 2020 a rise of 3% on the prior month with an insignificant fall of 0.2% to £4,331 in February 2020.
Court packs were down in RTA but up in EL/PL, indicating better settlement rates in the former than the latter.
Retention rates and other items
Retention rates generally remain similar in the long term although with an increase on PL claims moving closer to EL claims.
We have also included the graph below showing the percentage of court packs to stage 2 settlements which is a lot higher in RTA than EL/PL. We would just add that these are claims where a CPP is produced but that doesn’t necessarily mean they result in Part 8 proceedings.
We can also see the breakdown of concluded claims in RTA:
Civil Justice Statistics
The latest quarterly Civil Justice Statistics were also released in March. Whilst the overall number of claims issued considerably since 2012 and remained constant over the last 3 years, drilling deeper shows the reduction in personal injury claims issued.
The number of Personal Injury claims issued in the Courts during 2019 fell to 113,654, the lowest figure since 2011 and a reduction of around 20% since 2017. Over the final quarter of 2019, County Court claims decreased by 11% on the same period the previous year, within that Personal Injury down 5% to 27,000. Fears of increasing claims due to the introduction of QOCS have it seems been unfounded.
Specified money claims on the other hand have nearly doubled since 2012 and whilst these are made up of all sorts of different claims, that has also no doubt been fuelled by the rise in motor damage litigation over that period.
Interestingly, whilst the number of defended claims fell over the last quarter to 74,000, the number of cases going to trial between October and December 2019 rose by 15% to 17,000.
This could be a reflection of the reduced risk a defendant has now to run cases to trial - with no CFA uplift and fixed recoverable costs applying from the point the trial date is given – which in the Fast Track is often the same date that directions are provided.
The number of track allocations has increased which could in part be due to the fixed costs increasing once a case is tracked and claimant representatives reluctant to settle until the case is tracked.
Any reduction in the number of personal injury claims issued however is not reflected in the length of time it is taking cases to reach trial as the next graph shows. The average time cases take to reach trial has increased again. For small claims, this works out at 37.1 weeks to get to the hearing, up 1.9 weeks. In fast and multi tracks, the average time was 60.9 weeks, an increase of 2.1 weeks.
This is taken against a background of court closures – between 2010 and 2019, 90 County Courts closed, bringing the total number of courts down from 240 to 150. The number of judges has fallen from a high of 3,694 in 2011/12 to 2978 in 2017/18, recovering to 3,210 last year. Our own experience also reflects an increased number of cases being adjourned, often at the last minute, due to a lack of judicial availability.
With the whiplash reforms likely to place continued strain upon the court system, particularly for small claims, one hopes the government will recognise this and push more resources towards development of the courts and increasing the number of District Judges. Perhaps using the funds that would have gone towards ADR might be a step in the right direction.
For more information please contact Nigel Teasdale Partner, Head of Motor & Fraud Insurance M +44 7752 709114 email email@example.com