The government unveiled its intention to ban law firms from “encouraging” people to make claims by providing them direct incentives like iPads or cash. About time too, we say.
The 2010 report Common Sense Common Safety, by Lord Young, advised as much. Introducing incentives pollutes the claims procedures. Incentives are responsible for such terms in the dictionary of day-to-day life such as “cash for crash”, “compensation culture”, and “ambulance chaser”. The sort incentives are totally unnecessary as well – why would getting you an iPad possibly make you more likely to claim what might be significant levels of compensation fuel injuries? It’s beyond me.
This latest announcement accompanied the Ministry of Justice consultation which addressed the same ground, and also recommended raising the small claims limit for whiplash, from £1000 to £5000. The proposed reforms are part of a new tide of reforms in the personal injury sector focused on insurance fraud. The reforms will additionally expect the courts to dismiss compensation claim applications “in full” where the claimant has been “fundamentally dishonest”.
The Ministry of Justice (MoJ) completed its’ already flagged reforms to whiplash claims for compensation with the ban on lawyers making pre-medical deals, and the proposal of new unbiased medical panels. It appears that the MoJ believes that its’ actions to date has had a “major contribution” to the drop in motor insurance premiums over the last year. Really? At the same time, however, the Association of British Insurers have reported recent figures showing that the number of fraudulent motor claims rose to a record 59,900 in 2013, at a value of £811 million (a rise of 34%).
The Ministry of Justice has also said that the insurance industry has promised that it will transfer any savings that occur from these reforms “straight to customers”, but don’t bet your life on this. It wasn’t at all surprising to hear that many insurers still state that, before a decrease in premiums can be offered to the public, yet more additional reforms were needed. Of course they do – they’re out to make profits for their shareholders, and do so by keeping the level of premiums high while reducing the amount they pay out in insurance claims . Contrary to the claims made by the insurance industry, that doesn’t appear to be any real evidence that recent reforms to the whole compensation claims process has directly produced any real reductions in levels of insurance premiums paid by the public.
In spite of the demand from a significant number of personal injury lawyers, a ban on incentives has oddly been resisted so far by the Solicitors Regulation Authority (SRA). Why? It beats me?.
Unless it would lead to considerable injustice, the proposal to dismiss compensation applications where the claimant has been essentially dishonest will apply. It will be a topic for the court to determine whether a claimant has been dishonest, the MoJ spokeswoman said, based on the individual case and other factors.
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