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Spending review addresses low value personal injury claims

26/11/2015

Author: Colin Cook

Accidents and Injuries, Legal Updates

Chancellor George Osborne announced in his spending review yesterday that he intends to raise the small claims limit for personal injury claims to £5,000, and to do away with general damages for “minor” soft tissue injuries.

In practice, this will mean the following:-

  • Personal injury claims of up to £5,000 will be transferred to the small claims court;
  • There will be no automatic right to cash compensation for “minor” whiplash injuries.

The Chancellor has said that he suspects that these reforms would remove over £1 billion from the cost of providing motor insurance in the UK and he would therefore expect the motor industry to pass on these savings to motorists and introduce lower premiums. However, there is little evidence to date that the raft of reforms which have been implemented over the last few years have translated into lower premiums.

These planned measures raise a number of concerns:-

  • If the small claims court limit is raised to £5,000, genuine victims of injury will not be able to afford the legal help which they need to bring a claim;
  • There could also be an epidemic of cold calling from claims management companies, who seek to take advantage of “vulnerable” people who are unable to afford legal representation;
  • The NHS and benefits system could be left to pick up the bills which are currently met by insurers;
  • In the past the insurance industry has failed to implement savings to motorists and hasn’t lowered their premiums.

From a European perspective, the regulations state that where compensation is to be awarded to victims of road traffic accidents, damages should be quantified. These rules are inclusive of claimant’s seeking damages for “minor” soft tissue injuries and a reform to do away with general damages for “minor” soft tissue injuries could be in contravention of the European Regulations. 

The Government will be consulting in further detail on these planned reforms in the New Year. We wait to see whether these reforms are implemented.  

If you need advice on this, or any personal injury matter, please contact Colin Cook at Hatch Brenner on 01603 660811 or colincook@hatchbrenner.co.uk

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