New Changes to Personal Injury Claims Aim to Crack Down on Insurance Fraud

A number of changes to the way personal injury claims work are likely to be introduced in the coming months. What are they and what might they mean for you?

In his Autumn Statement in November 2015, the Chancellor announced the Government’s intention to remove the right to general damages for minor soft tissue claims and to transfer personal injury claims with a value of up to £5,000 for pain, suffering and general damages to the Small Claims Court. As a result of this, the Insurance Fraud Task Force recently announced an end to general damages for minor whiplash claims, along with an increase in the Small Claims Track (SCT) limit from £1,000 to £5,000 for injury claims.

According to Government data, there are currently around 190,000 employers’ liability and public liability claims registered with the Compensation Recovery Unit (CRU), the majority of which would be affected by this SCT reform, which could take place as early as April 2017.

These changes are designed to crack down on the so called “compensation culture” that surrounds this area of the industry by making harder for people to make fraudulent injury claims. The upshot of cutting down on fake claims, besides saving insurers and courts time and money, is that a reduction in fraud should lead to a reduction in insurance premiums, saving honest customers money on their cover.

Of course, a genuine personal injury compensation claims can still be made and in this situation an injured party will be left with two choices; either represent themselves in Court without the help of a Solicitor or seek the assistance of a Solicitor but face the prospect of having to pay for the resulting legal costs or damages from their own pocket.

The key point to note here is that the Small Claims Court does not make provision for the claimant’s legal costs to be recovered from the at fault third party or his or her Insurer, meaning that any claim would have to at least reasonably serious for the compensation received to outweigh any legal costs. Although it is possible that these proposed changes in legislation might be amended from the current suggestions before being introduced, the general view is that whatever the final outcome, the existing Small Claims Court limit of £1,000 will be increased.

The impact of these changes, not only upon personal injury claimants but to the insurance industry as a whole, will be profound.