Justice secretary Chris Grayling has refused to rule out raising the small claims limit in future despite deciding now is not the time for change.
Grayling said he had listened to the views of the House of Commons transport select committee and chosen to retain the present £1,000 threshold.
He also made it clear he wanted insurers to end the practice of third-party capture as he announced proposals to reduce the cost of car insurance.
In a foreword to the government’s response on reducing the cost of whiplash claims, he maintained there are ‘good arguments’ for increasing the limit to £5,000 for all road traffic accidents to encourage insurers to challenge suspect claims.
But he said: ‘At the same time, we have listened to the views of the transport committee and others that now may not be the right time to raise the small claims limit because of the risks that it may deter access to justice for the genuinely injured and encourage the growth of those disreputable claims firms which so damage the industry.
‘At this stage, we have decided to defer any increase in the small claims track until we can determine the impact of our wider reforms on motor insurance premiums and better safeguard against the risks.’
Grayling said he wants insurers to ‘end the practice’ of making offers to settle claims without requiring medical evidence. He will also press them to share more of their data on suspected fraudulent or exaggerated claims with claimant lawyers, with claimant lawyers also carrying out more effective checks on their potential clients.
In its consultation response, the Ministry of Justice said it ‘remains of the view’ that extending the small claims track would be beneficial in providing a low-cost route through the courts.
‘In saving the defendants’ costs and enabling them to challenge exaggerated and fraudulent claims, extending the small claims threshold would enable the government to keep up the momentum on insurers to reduce the cost of motor insurance premiums.’
The response said keeping the existing limit was a ‘sensible and pragmatic’ approach but the government will keep the issue under consideration for implementation ‘when appropriate’.
The ministry said it will need to develop ways to protect claimants in the future if the threshold is ever to increase.
The response added: ‘In particular, the government will seek to ensure that adequate safeguards are developed to protect genuine claimants from any detrimental effects relating to access to justice or to the under-settling of claims from any future rise in the limit.’
One change that will happen is the establishment next year of independent specialist medical panels for diagnosing whiplash and other soft tissue injuries.
Exact details are yet to be determined, but the government favours a form of accreditation, which it said may draw on systems already in operation. The consultation response said accreditation will be open to all practitioners and not limited to doctors.
It is likely that, once established, only medical reports from accredited examiners would be accepted as evidence in whiplash claims. This would likely involve a specific, standardised form for such reports that would be available equally to claimants, insurers and the courts.
Once the government has worked up the details and consulted with health bodies, it intends to publish details of the new scheme together with a full impact assessment.