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Making Sense of PI Reforms

Special Reports

by Donna Scully, Director, Carpenters

It is now over two years since George Osborne stunned the PIU sector by announcing a new round of the Autumn Statement of 2018, supposedly to combat fraud and reduce motor premiums by £50-60 per policy. Astonishingly, throughout the intervening period, no responsible MoJ Minister has been directly cross-examined on the rationale and evidence base for the proposed reforms. That changed on 16 January 2018. Though having witnessed the spectacle of the Justice Select Committee putting the MoJ’s Lord Keen of Elie through his paces, it is perhaps understandable why it has previously been avoided.

The encounter was highly revealing, but without being enlightening. It was novel to hear, yet depressingly familiar. Perhaps most of all, it was a damning indictment of departmental policy that seeks to effectively deny legal representation to hundreds of thousands of honest claimants every year.

It was clear to anyone who viewed the hearing that despite numerous consultations, inquiries, taskforces, stakeholder meetings, roundtables, conferences, correspondence and every other form of communication available, the MoJ still has little or no evidence of the supposed problems with which they seek to justify the reforms and more worryingly, few solutions about how to tackle some of the problems that they will create. Some of the views expressed by the Ministers are entirely outdated or discredited.

When asked to justify his claims that “most” claims are fraudulent, he offered no evidence. The likely greater role for the CMCs following the reforms is “not of itself a bad thing”. BTE insurance to fund legal representation may go up (becoming unaffordable to most), but they can still pay for it out of damages. Or they can visit their local Citizens Advice Bureau. The BTE market could be replaced by “good” CMCs, apparently unconcerned that claimants will be driven into the hands of money-driven, uninsured, unscrupulous CMCs. The legal process will be fully accessible to LIPs, as it’s not that complicated. There is no evidence that there will an increase in inequality of arms, although the Transport Select Committee wrote to him on precisely this point last year, highlighting its evidence from its 2013 inquiry.

As Jason Tripp of Coplus, an LEI provider, said in earlier evidence to the Committee, the reforms are a “one-size fits-all approach” and “were the reforms to go ahead and legal cost recovery to be removed for 95% of personal injury claims, it would cast doubt over the ability of legal expenses providers to use expert legal representation as the standard service in personal injury claims.” Mrs Justice Simler, a member of the Civil Executive Team of the judiciary for Eng- land and Wales said: “We were concerned by the absence of any evidence to support the assumption that the portal could or would be redesigned to accommodate litigants in person, either at all or in as efficient and effective manner as it currently operates.”

It was clear from the evidence session that the MoJ believe that a reconstituted Portal will successfully guide LIPs through the legal process. They cannot as yet explain how it will work, when the system will be fit for purpose and appear to be against piloting it prior to launch.

The supposed savings for insurers translating to a £50-£60 reduction in motor premiums has tumbled down to nothing, and is now translated as premiums will not rise quite as much as they might have. Insurers are still waking up to the fact that their customers will still require advice and assistance in the event of an accident, whether for an inquiry or non-inquiry. In summary, no-one outside the Ministry of Justice believes that “most” claims are fraudulent. Most, but not all, insurers and defendant solicitors still think the reforms are broadly a good idea, although not without consequences, but claimant solicitors, the trade unions, at least one LEI provider and the senior judiciary have serious concerns about the detrimental impacts caused by the reforms. Absolutely no-one thinks it is a good idea to encourage a re-vitalised CMC market to act as “advisers” to LIP claimants, apart from CMCs themselves – and MoJ Ministers. An already confusing world just got a little bit more difficult to comprehend.

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