Keoghs Insight


Samantha Ramen

Samantha Ramen


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Queen's Speech 2017

Client Alerts21/06/2017

Given the unexpected result of the Conservatives failing to achieve a majority Government, today’s Queen’s Speech was perhaps one that was somewhat trickier to predict than most. However, on the issue of civil justice and insurance, it seems as though the manifesto pledges of relevance have been taken forward:

Civil Liability Bill

  • This Bill will crack down on fraudulent whiplash claims and is expected to reduce motor insurance premiums by about £35 per year.

  • The Bill will ban offers to settle claims without the support of medical evidence and introduce a new fixed tariff of compensation for whiplash injuries with a duration of up to 2 years.

Financial Guidance and Claims Bill

The Bill will combine three financial advice bodies into one, ensuring that people across the UK are able to seek the help and advice they need to manage their finances.

The Bill will:

  • Transfer the regulation of claims management services to the Financial Conduct Authority, and transfer complaints-handling responsibility to the Financial Ombudsman Service

  • Establish a new statutory body, accountable to Parliament, with responsibility for coordinating the provision of debt advice, money guidance, and pension guidance.

Automated and Electric Vehicles Bill

The Bill will ensure the UK continues to be at the forefront of developing new technology in electric and automated road vehicles. The Bill will:

  • Extend compulsory motor vehicle insurance to cover the use of automated vehicles, to ensure that compensation claims continue to be paid quickly, fairly, and easily, in line with longstanding insurance practice

  • Allow the regulatory framework to keep pace with the fast evolving technology for electric cars, helping improve air quality

  • Provide for the installation of charging points for electric and hydrogen vehicles

What does this mean for insurers?

For insurers, this is undoubtedly positive news.

The transfer of CMC regulation and changes to liability rules to accommodate autonomous vehicles were, due to cross party support, less at risk of being abandoned.

However, the whiplash reforms would have been considered from a different viewpoint - there was no guarantee that we would see them again given the competing priorities that the now weakened Conservative Government are now facing. The appearance of the Civil Liability Bill is encouraging and shows that the Government are continuing to prioritise reducing the cost of living for ordinary working people.

The Government will be busy with Brexit – could the Civil Liability Bill start off in the Lords?

There is a possibility that this Bill could be started in the Lords to allow the Commons to debate the lengthy Repeal Bill.

In a normal course of events, the Lords would not be able to challenge anything of substance in the new Government’s manifesto – this is known as the Salisbury Convention.   However, even the House of Lords briefing on this issue (available here) is unclear as to how this might apply to a minority Government. Given reports that the Lords may try to “test government legislation” more than usual, opposition peers may not adhere. If this is the case, whiplash may be pushed back and challenged in the Lords.

When will see more detail on the Civil Liability Bill?

Both the House of Commons and the House of Lords will debate the Queen’s Speech next week. Each topic is given a set day for debate in both Houses; the justice topics will be debated on 27th June. We will only get further detail on the Civil Liability Bill if MPs or peers ask specific questions or raise an issue specifically on the measures included in the Civil Liability Bill.

The House of Commons is due to announce its timetable for the ‘proposed subject for debates’ tomorrow, although the Speaker won’t confirm until the day of the debate the exact topic.

Keoghs Viewpoint

As we’ve mentioned earlier, the appearance of a dedicated “Civil Liability Bill” is promising, perhaps made more so that it provides a relevant legislative vehicle for any legislation that the Government decide is required on the discount rate to be slotted in at a later stage.

So what now? When can we expect to see the Bill itself?

Well, given that there is little parliamentary time before October (less than a month before summer recess, and a mere 9 days after recess but before conference season), it is difficult to see much progress being made on this Bill within the next few months. From the Government’s perspective, it would seem sensible to delay the introduction of this Bill until the Autumn, when Parliament is back in session for a decent length of time to allow full and proper debate on the issues. This won’t be until 9th or 10th of October.

Although this extended delay may be frustrating, this provides opportunities for the insurance industry in terms of dedicated lobbying of MPs, peers, and MoJ officials. It is vital to stress the importance of the wording of the definition of “whiplash” – an issue that the industry was at pains to try to correct after seeing the deficient wording contained within the Prisons & Courts Bill. This delay will hopefully ensure that the Ministry of Justice gets it right the first time around so that these reforms can go as far as possible to achieve the stated “£35 a year” saving on motor insurance premiums.