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Grayling increases small-claims limit to £5,000 in whiplash reduction plan

Industry News : 11 December 2012

Justice secretary Chris Grayling’s long-awaited blueprint to reduce the number of whiplash claims will be revealed today.

Grayling will outline proposals for independent medical panels to diagnose whiplash injuries and increase the small-claims track threshold from £1,000 to £5,000 in a four-month consultation due to be launched this morning.

The argument that changes could harm access to justice and result in victims with justified claims either not challenging unreasonable offers by insurers or failing to claim proper damages will be acknowledged by the paper.

Fradulent or exaggerated claims will be less likely to occur as a result of the reforms, insists the Ministry of Justice, which also states that any which are made can be appropriately tested. Grayling stated; ‘For too long honest drivers have been bearing the price of a system that has been open to abuse and it is time for that to change.

‘We are proposing action to support effective whiplash diagnosis by medical experts and to simplify procedures which will help bring speculative or fraudulent claims before a judge – so genuine claims can still be settled but fraudsters are left in no doubt there will be no more easy paydays.’

Reforms have been anticipated since the MoJ announcement in the summer which highlighted that it wanted to cut the number of whiplash claims. This came after summit meetings with the insurance industry in February.

The current arrangements for whiplash diagnosis consists of patients visiting either their GP or a doctor from an organisation recommended by the claimant law firm, with the medical expert being paid the standard fee of £195. The MoJ believes that independence would help address concerns surrounding the diagnosis of whiplash.

The two options being proposed are for either an accreditation scheme led by a separate organisation or a private contractor that would assess whiplash claims and supply reports using a standard form. An independent board to be made up of insurers, claimant lawyers and representatives from the court service would choose the contractor.

The changes to the small claims procedure are likely to cause most controversy amongst the claimant sector. A reason to increase the threshold from £1,000 could not be identified during a consultation in April 2007. Sir Rupert Jackson reached the same conclusion in 2009 when he reviewed civil litigation costs.

The government is of the belief that many small-value whiplash claims are relatively straightforward and that the small-claims track is the most suitable venue for them – a move which would largely see the elimination of solicitors dealing with claims of less than £5,000.

The consultation proposes three options. These include increasing the threshold for RTA whiplash claims to £5,000; increasing the threshold for all RTA personal injury claims (including whiplash) to £5,000 or retaining the current threshold.

The paper also states that the small-claims track is a ‘less costly regime in which to bring a case and therefore a less costly one in which to challenge questionable whiplash injuries’.

The consultation closes on March 8th 2013, 14 working days before the implementation of the Jackson reforms, which include reform of no-win, no-fee and the ban on referral fees in PI.

In addition, March 8th is likely to see a 60% reduction in fixed recoverable costs for low-value RTA claims going through the electronic portal and the portal extended for employer and public liability claims and claims of up to £25,000.