Government edges towards small claims track limit increase

Although the government recently announced it was not planning to raise the personal injury claims’ small claims track limit from ¬£1,000 to ¬£5,000, but was going to keep this proposal “under review”, it has revealed in a House of Commons Transport Committee report that it believes there is a “strong case” for doing so. Nonetheless, rather than push ahead with this UK law review, it is instead going to concentrate on implementing the legislative changes it has already approved.

The Committee said that when it does re-examine this issue, it will aim to ensure that there are proper safeguards created to ensure genuine compensation claimants do not suffer any problems as a result of the small claims limit raise, which include personal injury claims being settled for less than the amount the claimant deserves, or a lack of access to justice.

Insurers have been pushing for the personal injury small claim track limit to be raised in a bid to reduce the number of whiplash injury claims in the alleged ‘whiplash capital of the world’, as this would save them money, but many personal injury solicitors are worried it would lead to claimants being underrepresented in their compensation claims and are sceptical about insurers’ arguments about the cost and extent of fraudulent whiplash claims.

This comes as startling figures from the Claims Recovery Unit (CRU) of the Department for Work and Pensions show that the number of whiplash injury claims caused by road traffic accidents has actually fallen in recent years, but that this decline has been more than matched by an increase in the number of other head and neck injury claims, as well as certain psychological injury claims. This may indicate that claims formally diagnosed as whiplash injuries are now being described as something else, and shows that if the UK was in the midst of a ‘whiplash epidemic’, the epidemic seems to be subsiding.

Furthermore, while the insurance industry told the Transport Committee that the proportion of whiplash compensation claims was 78% of all claims, the CRU puts this at 58%, with the overall number of road traffic accident claims remaining static.

The government report reveals that ministers are unwilling to stand up to insurers on behalf of genuine sufferers of whiplash injuries by properly addressing suggestions about the UK’s alleged world-leading whiplash rate or the true cost of fraudulent claims on car insurance policies.

The Competition Commission recently pointed out that insurance companies have no motivation to keep repair costs down when they are not liable for the costs of the claim, which is typically the case following a road traffic accident. Some cars are not even adequately repaired, consumers find it hard to identify value in the market, and the contracts between insurers and price comparison websites can make it hard for people to find the best price, the commission added.

Currently, insurers are allowed to make an offer to claimants without even obtaining medical evidence about the extent of their injuries. The government does not appear to be doing anything to deal with this.

The Transport Select Committee is asking for evidence regarding whether more could be done to reduce insurance premiums relating to changes to whiplash laws, with this concluding in January.