MoJ decision is a surprise and an overdue boost for claimant firms.
Today you will see the Ministry of Justice attempt to rewrite history.
Back in March the intention was quite clear: to tackle whiplash you needed independent medical panels and the limit in the small claims track had to increase to £5,000.
The consultation document at the time said taking lawyers out the equation was possible because district judges would ‘equalise any uneven playing field’ and whiplash claims were now ‘more straightforward’ for unrepresented litigants.
The paper even noted that the changes ‘taken together’ would make it less likely that fraudulent or exaggerated claims would be made.
Fast forward seven months and a press release arrives in my inbox from the MoJ, previewing today’s response to the whiplash consultation.
There was not a single mention of the small claims track to be seen. It had vanished, treated like it was all a dream (or a nightmare if you’re a claimant firm).
Only through a follow-up question to the department did I establish the limit would remain unchanged. Perhaps not a U-turn but certainly a rapid back-track given how much importance the government once placed on this key policy.
So what has brought about this reversal?
Justice secretary Chris Grayling points to the AA statistics that car insurance premiums have reduced since the Jackson reforms. In effect the small claims track change was rendered unnecessary by previous changes.
But the government knew (or at least hoped) that premiums would come down after April – so why was it proposing more change in March?
The answer surely lies in that cosy relationship between the insurance lobby and the government suddenly getting a little less comfortable.
The key moment was the Commons transport select committee report in July, which laid into the insurance industry with both barrels.
It noted ‘surprise’ that ministers ‘seem only to be listening to the insurers’ perspective’ in the effort to reduce motor premiums, especially given that insurers have ‘encouraged excessive and unnecessary claims within their own business models’.
Suddenly it was no longer convenient for the government to seem so close to insurers. They were a tarnished brand and the chance of them getting their own way, as has happened so often since 2010, was diminished.
There is also another element which has turned the tide: many insurers are now in bed with claimant firms through alternative business structures.
All of a sudden, those calling for change found themselves in joint ventures with law firms facing massive cuts in their profits. It’s amazing how a little self-protection will see you change your mind – I’ve heard of several insurers lobbying, incongruously, behind the scenes for no change.
Whatever the reason, the claimant firms will celebrate this victory and the Association of British Insurers will go back to its corner and pause for breath. No doubt it will be counter-punching soon.
Ultimately, it’s taken 10 months of speculation and anguish, not to mention significant costs, but more or less everything nothing has changed. Just don’t expect any press release to say that.