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Civil Litigation Section

A2J: The case against the government’s whiplash reform proposals

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Access to Justice (A2J) is leading the charge against the government’s plans to raise the small claims limit for PI claims. Here, A2J chair Martin Coyne explains why the evidence justifying the reforms is flawed - and how solicitors can get involved in their campaign.

A2J is one of a number of groups campaigning to make the government change its mind on scrapping the right to compensation for minor whiplash injuries and raising the upper limit for personal injury (PI) claims from £1k to £5k.

martin coyne

Martin Coyne

Although the government has indicated that an estimated £50 in savings will be handed back to policyholders via lower premiums, there is no compulsion on insurers to do so, and their track record of rewarding customers in the wake of previous claims legislation has been patchy.

The core issue for politicians and others with an interest in this issue is already clear: does the uncertain promise of £50 off a motor policy trump the rights of people to seek redress for their injuries?

Not only have these rights existed in the UK for centuries, but the proposed upper limit of £5k represents a lot of money for the general public, with the average gross salary being around £26k a year.

‘Grossly overstated’

A2J considers the ‘evidence’ used by the government to justify the reforms to be seriously flawed. Research commissioned by A2J from Capital Economics found that statistics provided by the insurance industry grossly overstated the incidence of motor fraud.

Using the Association of British Insurers’ (ABI) own estimates for fraud, Capital Economics says that, overall, motor fraud is equivalent to £27 per policy, but this number includes ‘suspected’ fraud as well as ‘proven’ fraud.

This figure falls to around £4 per policy if the ABI’s estimate for the value of ‘proven’ fraud is considered alone.

To most of us, proven fraud means a conviction or a police caution, but the insurance industry labels a claimant ‘fraudulent’ if, for example, the claimant decides not to pursue a claim after starting the process. Insurers are using ‘suspected’ fraud figures to paint a bleaker picture of the extent of fraud than the reality, in order to press their case for a clamp down on PI claims.

The Capital Economics research will be the centrepiece of A2J’s formal submission to the government during consultation. The data is undoubtedly complex, but there is evidence to show that the incidence of whiplash claims has fallen, from 570,000 in 2012 to 335,000 last year (source: CRU FOI request), a 40 per cent reduction which equates to potential savings of well over £500m to insurers.

Premium increases, which insurers have blamed on a rising incidence of whiplash claims, are closely correlated to a fall in investment returns. Prior to the global financial crisis, investment returns equated to nearly 20 per cent of total premium income. Following 2008-09, investment returns fell to 3 per cent. It’s no coincidence that insurers upped their attack on claims costs (such as PI and credit hire) after 2009.

‘Plenty we agree on’

The irony is that, while there are fundamental differences between insurers and the legal profession, there is also plenty we agree on.

A2J encourages a cross-industry, targeted effort to share data, stop fraud and remove the scourge of cold calling. We also support a registration period for RTA Portal claims notification of 12 months, which would stop the scourge of data mining almost overnight.

The claims sector has gone through hyperactive law changes in recent years, and there is merit, surely, in pausing while the effects of the latest round of changes take time to bed in. This was the recommendation of the Transport Select Committee, which examined the whiplash issue in 2013, and concluded that further legislation should wait until there was clarity over the effect of the previous raft of changes to the law (i.e. LASPO).

Modern governments, however, like to give the impression of being busy. The former prime minister and chancellor believed their measures would deliver positive headlines. We wait to see whether the new administration shares this approach.

Whether the public will agree that losing their rights to redress is a price worth paying is moot. Early research carried out by A2J with the public found that nearly 60 per cent thought the proposals unfair.

In his response to the Transport Select Committee’s 2013 report on whiplash claims, then Justice Secretary Chris Grayling said: ‘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.’

All bets are off on the likely date for a government consultation on the proposals, but while optimists may think high politics will kick PI reform into the very long grass, we at A2J are not complacent.

The insurers will not give up, and neither will we, until this unnecessary attack on peoples’ rights is taken off the agenda for good.

A2J is a campaigning organisation which needs help and financial support from our profession. Thousands of jobs are at stake if these proposals become law. Please contact me at if you would like to contribute, or visit our website and click on ‘get involved.’ Every pound you contribute will help to safeguard peoples’ long-held rights to seek redress for their injuries.

Martin Coyne is managing director of Ralli Ltd and chair of A2J.

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