MPs today warn the government that its plans to cut the cost of whiplash claims will impair access to justice and leave the door open for claims management companies.
In a damning report on the cost of motor insurance, the Commons transport select committee says the proposed increase in the small-claims court limit will only encourage fraudulent and exaggerated claims.
It calls on the Ministry of Justice – currently consulting on the limit – to wait until the impact of all civil litigation reforms was fully known.
And it notes ‘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’.
Claimant campaigners today hailed the report as a ‘welcome shift to transparency and truth’ in the whiplash debate.
The MoJ said in a statement it will consider the views of the committee. It is likely to response to the consultation in the autumn.
The select committee, chaired by Liverpool Labour MP Louise Ellman (pictured), heard evidence from figures from the legal profession, insurance industry and medical profession earlier this year.
The report says it does not support the plan to switch whiplash claims up to £5,000 to the small-claims track – effectively removing legal representation when making claims.
It said: ‘We believe that access to justice is likely to be impaired, particularly for people who do not feel confident to represent themselves in what will seem to some to be a complex and intimidating process.
‘Insurers will use legal professionals to contest claims, which will add to this problem.
‘It would be financially difficult for many solicitors to assist litigants fighting personal injury claims using the small-claims procedure, given the limited fees available. However, we are concerned that some claims management firms might find a way to enter the process, fuelling another boom in their activities.’
The report concludes that information now provided by the government shows that the number of whiplash claims has fallen since 2010–11 and is now lower than at any time since at least 2007–08. There is no conclusive evidence to prove or disprove the government’s claim that the UK is the ‘whiplash capital of the world’.
The committee supports proposals to improve medical reports accompanying whiplash claims and says the reforms should go further to require claimants to provide more information in support of their claim, such as proof they saw a doctor shortly after their accident.
In addition, the committee recommends the government bring forward recommendations to reduce the time period during which whiplash claims can be made.
On insurers’ commitment to pass on reductions in costs through lower premiums, the committee recommends that the government explain how it will monitor that promise. Ellman concluded: ‘In the debate about how to reduce fraud and exaggeration, genuine claimants should not be demonised simply because their condition cannot be picked up on a scan.’
In a short statement in response to the report, justice minister Helen Grant said: ‘We have already made major law changes to turn the tide on compensation culture to help ordinary people with the cost of living - and we have heard this week that insurance premiums are now falling as this starts to make an impact.
‘We have consulted on further measures to tackle the issue of bogus whiplash claims, including improving medical diagnosis and ensuring questionable claims can be challenged in court.
‘We are grateful for the committee’s work on this issue and will consider their views as we decide on our next steps. We agree with them that people must continue to be able to make genuine claims.’