Proposed changes to RTA claims
- January 30, 2020
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Proposed reforms affecting compensation claims for people involved in road traffic accidents are set to be introduced from April 2020. As part of the Civil Liability Act 2018 the Government is bringing in a system of fixed tariffs on low-value injury claims for whiplash where the duration of the injury is less than two years. The Government views the reforms as necessary to tackle exaggerated or fraudulent claims which are adding to the cost of the average driver’s insurance premiums. Critics of the reforms believe it will add additional stress and difficulty in processing genuine claims, saving the insurers money at the expense of the injured party.
What Are the Main Changes?
The main change drivers will notice is for whiplash claims valued below £5000. Previously the limit for processing in the small claims court was £1000, but from April 2020 this will rise to £5000 for whiplash injuries and £2000 for other personal accident claims. A new online portal is to be set up for claimants to process their own claims as the new £5000 limit means insurance companies will not be required to pay any legal expenses on a claim valued at less than £5000. Therefore claimants will most likely need to represent themselves unless they are prepared to cover their own legal costs on a small claim.
A further major change in the reform affects the total compensation a claimant can actually expect to receive. The Government is introducing a new fixed tariff damages scheme affecting the first 24 months of any whiplash injury claim. This part of the reform also looks as if it will benefit insurance companies as the tariffs, set across various periods over the 24 months, will see compensation levels paid at a much lower rate compared to the current national average. Some projected examples of the new tariffs compared to current payout averages are:
- Injury duration 0 – 3 months, Projected tariff £225, Current average damages paid £1800
- Injury duration 6 – 9 months, Projected tariff £805, Current average damages paid £2700
- Injury duration 12 – 15 months, Projected tariff £1910, Current average damages paid £3650
- Injury duration 18 – 24 months, Projected tariff £3725, Current average damages paid £4750
The discrepancy between the new tariff damages and the current average damages paid indicates the potential for major reductions in payouts on genuine cases where the duration of the injury is less than two years. There is no revision planned for injuries lasting over two years.
Savings Passed On?
The Governments main aim in these reforms is to reduce the level of claims made for whiplash and by association, the money paid out each year by insurance companies. The Government expects the insurance companies to pass on these savings to their customers in reduced premiums and say they will be monitoring if this happens. For claimants who now have to process their own claims, facing the insurer’s legal teams while most likely representing themselves, this will be the minimum they will expect. Claimants may well also need to supply and pay for the medical evidence required to prove a claim.
The aim of the reforms may be well-meaning and please the insurance industry but it could end up placing a lot more stress on genuine claimants, who also end up being paid significantly less compensation than before. As people become more aware of the April 2020 schedule it could also see a surge in claims to beat the cut-off point and avoid the pending fixed tariff damage amounts. The success of the reform will also depend heavily on delivering an easy to use online portal.
Mike Massen – January 2020