Steve Thomas, Director of Market & Public Affairs, reflects on the first three months of the Conservative majority Government and recent announcements affecting personal injury compensation.
As I write this, the not-so-new Conservative majority Government is rapidly approaching three months in office. Against a plethora of competing issues, it is already worth taking stock to remind ourselves of what has happened in that period in terms of personal injury compensation and how that may start to impact the future landscape.
It has certainly not been dull! The following represent the highlights in a little over 10 short weeks:
- The Claims Management Regulation Unit annual report (2014/15) has been published. This made for concerning reading and confirmed that CMC activity in the personal injury (PI) sector has been on the increase. Overall turnover of PI CMC companies was up and of more concern, new applications to become a PI CMC were 64% up on the prior year. A further observation was that some CMCs are exiting the PI arena and focusing on the bent metal aspects of RTA claims where they can find greater margins.
- This report was closely followed by a Sunday Times article featuring Complete Claim Solutions. This comprised of an exposé of their business methods and the assertion that this CMC alone was making seven million cold calls per year.
- We have little doubt that the above all contributed to the subsequent announcement in the Budget that CMCs are to be reviewed by a joint Treasury / MoJ enquiry led by Carol Brady. Whilst the fee capping aspect mentioned primarily relates to the PPI world, we hope that the enquiry will shine a light on CMC practices and the deficiencies of the LASPO drafting around the referral fee ban. We now have more low value RTA claims than before the previous Government intervened post-Jackson, and it appears more than likely that an upsurge in CMC activity accounts for a not insignificant element of that.
- Whilst we were all expecting a review of MedCo once six months of data was available to interrogate, few anticipated Lord Faulks’ announcement that the review would take place after just three months. The “gaming” of the process by some MROs, the issue of two Judicial Reviews and disquiet on all sides about MedCo’s ultimate effectiveness has forced an earlier than expected review. We welcome this early intervention and will track the review closely.
- The MoJ also announced that they have asked the Civil Justice Council (CJC) to review the dramatic increase in deafness claims and report back. We understand from the MoJ that no timeline has been set as yet nor has the CJC been given any firm terms of reference. Once again, we welcome this intervention in an area which has clearly been exploited as claimant lawyers and CMCs alike have moved into a more lucrative hourly rate market.
- We continue to engage with the Department for Transport (DfT) on the issue of driverless cars. Further announcements and financial support were announced in the budget and the initiative is moving on at some pace now. Issues such as data sharing are now in focus and work is progressing to understand how issues such as civil liabilities will be determined in the new world of autonomous vehicles.
- Finally, and by no means of least importance, was Michael Gove’s speech at the Legatum Institute where he set out his vision for our courts and justice system. Gove is well known as a zealous reformer and his vision encapsulates streamlining, simplification and greater reliance on IT. He wants to drag the courts into the 21st century, strip out waste and deliver a more effective and efficient process. A move away from “two tier” justice which resonates with the Government’s “one nation” message. How this revolution affects PI litigation is yet to be seen but we would be surprised if it escaped unscathed.
As I said, these are just the highlights. Not bad for 10 weeks of a new Government and just reiterates our view that personal injury compensation, whilst certainly not front and centre, remains on the Government’s radar. Their overarching policy of “cost of living” can clearly be linked to insurance premiums and with the AA confirming a 5.2% increase in personal motor premiums in Q2 2015, we should not be surprised if this policy area remains in focus. Whether the Government is prepared to re-visit the RTA and deafness claims process is yet to be seen but increasing premiums linked to escalating frequency must make this a possibility.
So, a busy three months and in all likelihood more to come. We continue to engage with both the MoJ and DfT on all these issues and will keep clients closely appraised as to progress and developments.
