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Keoghs Insight

We keep you up-to-date on emerging market issues and their impact on the insurance sector, through a variety of publications, events and our leading market initiatives.


Samantha Ramen

Samantha Ramen

Director of Market & Public Affairs

T: 07713 393534

Time for insurers to lash out?


Government announcements are like buses – you wait ages for one and then three turn up at once. In the last couple of weeks, we have had statements or legislation on whiplash, driverless cars, and most notably the shock decrease in the discount rate.

The timing has never been worse - insurers are understandably focusing on the changes to large loss claim pay-outs ahead of the discount rate drop on 20th March. But what about what we’ve all been campaigning on for years – what about the whiplash reforms, announced two working days before?

The earlier than expected publication of the consultation response was not unwelcome. The detail, however, leaves a lot to be desired. There is no firm commitment to direct claimant access to the portal, nor to any other litigant in person safeguards. However, this is not even what is of most concern – going back to basics, what does whiplash even mean?

Page 14 of the Government’s response confirms that the reforms will cover “RTA whiplash claims…a definition will be developed to reduce the scope for affected claims to be displaced into other categories of claim”. This seems to follow the general theme of the response - that as for claimant safeguards, the detail will be worked up at a later stage.

However, the oddity is that a definition was developed. Indeed, it was published just a couple of hours after the response, on page 59 of the Prisons and Courts Bill. Paragraph 61(1) of the Bill states that a whiplash injury means “an injury, or set of injuries, of the neck or the neck and upper torso”.

This seems bizarre to say the least. Firstly, that the Government explicitly state that a definition will be worked up and yet they had one that was published within a matter of hours of the response. And, secondly, that it achieves precisely what they originally sought to avoid i.e. displacement into other categories of injury claim. Do we not already have a perfectly workable, tried and tested definition of whiplash in existing MedCo rules?

Surely, it’s plain to see that limiting whiplash injuries to the neck and upper torso leaves the door open to a deluge of claims labelled as lower back injuries. It is clear “upper torso” would not include a pain in the lower back, and arguably pain in one or both shoulders too. It is widely accepted that the very nature of whiplash is that it is a flexion extension injury – an injury to the cervical spine - but that to circumvent the new general damages tariff, that pain could manifest itself elsewhere. The flawed definition will mean inevitable displacement of injury type, and not only because many people already have existing lower back conditions. The incomplete definition reeks of satellite litigation – something that both Government and the Courts were seeking to avoid.

Some might say that this isn’t the be all and end all - the increase in the Small Claims Track limit will have some impact on a claimant solicitor’s motivation to capture and run these claims. But in a new streamlined more automated process, DBAs will suddenly become much more attractive with injuries outside of a fixed damages tariff. Also, it is not just claimant solicitors that we need to be wary of – CMCs are likely to seize any opportunity in this space and descend in droves, especially given that a 2019 PPI claims deadline has been announced and that the transfer to a more stringent FCA regulation regime seems to be ever delayed.

With this in mind (and without taking into account associated inflationary causes such as the discount rate decrease and ever increasing IPT), how the Government can still expect a £40 reduction in a motor insurance premium is beyond anyone’s comprehension.

The Keoghs Market Affairs team recognise that this is an urgent issue that needs addressing. Dedicated and targeted lobbying and Government liaison is required to ensure that an amendment is made to paragraph 61 of the Prisons and Courts Bill to encapsulate all potential areas of displacement. The Bill has its second reading on 20 March; it is likely to proceed to Committee stage in the Commons after Easter recess which ends on 18th April. It is at this stage that the Bill is examined line by line; MPs will also have an opportunity to table amendments for discussion.

Keoghs is currently working up a parliamentary engagement strategy to address this potential loophole in the legislation. We will keep clients informed as this work progresses.

For more information please contact:

Samantha Ramen
Director of Market & Public Affairs
T: 07713 393534

Steve Thomas
Consultant, Market & Public Affairs
T: 07702 373647